US Announces Tax Credit Support For Ingot & Wafer Production

US Govt Grants 25% Investment Tax Credit to Solar Ingots And Wafers

In order to boost the domestic production of Ingots and Wafers in the United States (US), the US government has now planned to support the solar companies to invest in solar and wafer production.

To implement the hand-holding support, the US treasury department recently notified the inclusion of solar ingot and wafer production facilities and equipment to qualify under section 48D for a 25% investment tax credit (ITC). The US government will provide this investment under its final rules for the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022 (CHIPS). This comes at a time when several countries are trying to create tariff and other barriers against the intrusion of cheap Chinese solar cells, modules and other equipment which apparently are hurting the growth and profitability of domestic solar industries in many countries.

The Treasury’s final rules confirm that support applies to advanced manufacturing facilities and equipment that produce semiconductors, including the slicing, etching, and bonding of the semiconductor-grade polysilicon used in photovoltaics (PV) modules.  This support will be available for facilities that begin construction before 2027 and does not preclude facilities from qualifying for other applicable tax credits.

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A statement from Abigail Ross Hopper, President and CEO of the Solar Energy Industries Association (SEIA) on the final rules said, “Treasury’s final rules will create new opportunities for solar manufacturers and encourage the upstream development of the solar supply chain. Supply chain accessibility and security remains one of our biggest challenges in the US solar and storage industry. While the United States is a global leader in module manufacturing, we don’t have any ingot and wafer facilities in operation yet, representing a critical gap in the solar supply chain.”

“For the last two years, SEIA has been urging the administration to use all of the tools at its disposal to support ingot and wafer production. We commend Treasury for taking a thoughtful approach to industrial policy, helping to revitalize our communities with great-paying manufacturing jobs and boost our energy independence. This is a win-win for businesses and our economy and will continue the manufacturing renaissance in America for years to come. We look forward to working with the solar and storage industry to build out our supply chain and realize the full potential of this new incentive” she further added.

Background  

Polysilicon wafers serve as the base of a solar cell and act as a semiconductor, creating the electrical current in a solar cell. To make the wafers, polysilicon is shaped into an ingot and then sliced to make wafers. The United States, akin to India currently does not have full-fledged ingot and wafer production in operation yet due to manufacturing complexities and the highly specialized equipment needed to create these facilities, making incentives an important part of the equation for wafer producers. Since the Inflation Reduction Act passed, there have been 21 gigawatts of wafer announcements and 10 gigawatts of ingot announcements but only 3.3 GW of ingot and wafer capacity is under construction.

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Several Indian companies like Vikram Solar, Waaree Energies have announced starting solar module factories in US to harness the benefits under the Inflation Reduction Act. On the other hand, the several Indian companies told Saur Energy that they are waiting for the US Presidential Elections to take a final call to start their production centers in the US. Although many of the Indian module makers are keen to invest in the US, they are taking looking at all the possible scenarios and doing the risk analysis before venturing into the western soil.