U.S. Senators Call for Amendment in Renewable Energy Tax Credit Guidance

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Five U.S. Senators, Bob Casey (D-PA), John Fetterman (D-PA), Tammy Baldwin (D-WI), Sherrod Brown (D-OH), and Tina Smith (D-MN) penned a letter to U.S. Department of the Treasury Secretary Janet Yellen and Internal Revenue Service (IRS) Commissioner Daniel Werfel. The letter addresses concerns over the Domestic Content Bonus Credit Guidance (“Guidance”) issued by both the Treasury Department and the IRS.

The senators request an amendment to a provision of the Guidance, which they believe contradicts the initial intent of the Congress. The Guidance pertains to the implementation of the domestic content bonus credit requirements for solar and other renewable energy electricity generation projects under the Inflation Reduction Act (IRA).

According to the senators, the IRA’s renewable energy credits were designed to stimulate the development of the U.S. renewable energy sector. More specifically, the domestic content bonus credit aimed to encourage the growth of U.S. clean energy supply chains by providing a bonus credit for projects fulfilling two conditions:

  1. All steel or iron in a project must be produced in the U.S. (“steel or iron requirement”).
  2. An increasing percentage of the manufactured products in a project must be produced in the U.S. (“manufactured product requirement”).

While the senators agree with the Treasury and IRS’s decision to apply the steel or iron requirement to structural components, they expressed concern over the categorization of “photovoltaic tracker” as a manufactured product in the “safe harbor” provisions.

The senators argue that a photovoltaic tracker, a mounting structure that follows the sun’s position, should be included in the “steel and iron” category due to its structural nature. They point out that tracking systems’ non-structural components, such as bearings, drive train components, and shock absorbers, can be classified as manufactured products.

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The senators emphasize that recognizing the structural nature of tracking systems is crucial as mounting structures concentrate steel and iron in a solar project. They argue that classifying tracking systems as manufactured products could potentially allow many structural steel components of new U.S. solar projects to be imported from other countries, including China, contradicting Congress’s original intent.

The senators have requested an amendment to the Guidance to distinguish between the structural steel components and the other components of tracking systems more clearly. The proposed amendment would involve including items like module rails, support columns, torque tubes, and other structurally functional elements in the Steel/Iron category, excluding them from the Manufactured Product category.

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