Senate Passes Solar-Friendly Inflation Reduction Act


The U.S. Senate has passed the Inflation Reduction Act – a piece of legislation that will, in part, foster growth for the solar energy industry.

A key provision in the bill extends both the 30% solar investment tax credit (ITC) and less-commonly used $0.015/kWh production tax credit (PTC) for projects that start construction before Jan. 1, 2025. Standalone energy storage projects would also be eligible for the ITC, providing incentives for utilities and grid operators to deploy more energy storage projects as a hedge against solar intermittency.

Moreover, the act includes new tax credits for certain solar projects placed in service in 2025 or later that start construction before 2033.

Domestic solar manufacturing also receives a boost in the legislation, with the new Advanced Manufacturing Production Credit. This credit aims to incentivize U.S.-based production of solar power components and materials, such as solar cells and modules, inverters and polysilicon.

“It will shore up the U.S.’ place as a clean energy producer and reduce our greenhouse emissions by 40 percent by 2030, while investing in the coal communities that powered our nation for generations,” states U.S. Sen. Bob Casey, D-Pa. “Better yet, we’re going to create 9 million well-paying jobs in the next decade to get this done. I successfully fought to include a provision that will promote the creation of family-supporting clean manufacturing jobs here in the U.S. rather than in competitors like China, because we don’t have to choose between green energy and our workers.

Casey helped passed a provision to incentivize clean energy deployment and manufacturing in “energy communities” – areas whose economies and jobs are or were dependent on the coal, oil or natural gas energy sectors. A tax credit will provide a bridge for energy workers and communities as the U.S. transitions to a clean energy economy as well as prioritize workforce development.

This bill invests in American-made energy and manufacturing. The IRA includes amendments that will require some clean energy projects to meet strict domestic content standards to receive tax credits. Further, all clean energy projects will receive a 10% bonus tax credit for meeting domestic content standards.

The IRA includes tax credits to accelerate U.S. manufacturing of solar panels, wind turbines, batteries and critical minerals processing, as well as a $7,500 credit for purchasing a new electric or hydrogen vehicle that was made in North America. The bill will grow a skilled workforce that provides good-paying union jobs as the clean energy industry grows.

“With the passage of the Inflation Reduction Act in the Senate, solar and storage companies are one step closer to having the business certainty they need to make the long-term investments that decarbonize the electric grid and create millions of new career opportunities in cities and towns across the country,” says Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA).

Image: Jeremy Bezanger on Unsplash

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