Domestic in the US solar tracker manufacturing activity is bound to grow as a result of the recently passed Inflation Reduction Act, which includes a manufacturing tax credit for solar tracker components. The federal spending package will provide manufacturers with credit for torque tubes and structural fasteners made domestically in the US.
“For those tracker manufacturers who move their torque tubes or structural fasteners overseas, I think these manufacturer tax credits will bring them back home,” said Ed McKiernan, president of Terrasmart.
As this happens, the end customer, the owner-operator of the PV array, will want to compete at a lower price. The price of trackers will become more competitive relative to fixed tilt.”
The IRA specifically mentions tracker systems over fixed mounts, as the former is the primary solar structure for large projects or ground-mounted PV projects in the US. Within a similar project footprint, solar trackers can generate more energy than fixed-tilt systems because the mounts are rotated 24/7 to keep the modules facing the sun.
Torsion tubes receive a manufacturing credit of US$0.87/kg and structural fasteners receive a manufacturing credit of US$2.28/kg. both components are typically manufactured from steel.
Gary Schuster, CEO of domestic bracket manufacturer OMCO Solar, said, “It can be a challenge to measure the IRA industry input in terms of tax credits for tracker manufacturing. Having said that, they concluded that it makes perfect sense to use the pounds of torque tube in the tracker as a measure because it is a common standard for manufacturing trackers. I don’t know how else you can do it.”
The torque tube is the rotating part of the tracker that extends throughout the ranks of the tracker and carries the component rails and the component itself.
Structural fasteners have multiple uses. According to the IRA, they can connect the torque tube, connect the drive assembly to the torque tube, and also connect the mechanical system, the drive system, and the solar tracker base. Schuster expects structural fasteners to account for around 10-15% of the total composition of the tracker.
Although not included in the capacity credit portion of the IRA, ground-mounted fixed-tilt solar mounts and other solar hardware can still be incentivized through the Investment Tax Credit (ITC) “domestic content bonus”.
PV arrays with at least 40% of their components manufactured in the US are eligible for the domestic content incentive, which adds a 10% tax credit to the system. If the project meets other apprenticeship requirements and prevailing wage requirements, the system owner can receive a 40% tax credit for it.
Manufacturers place great importance on this fixed tilt bracket option as it is made primarily, if not exclusively, of steel. Steelmaking is an active industry in the USA and the domestic content credit provision simply requires that steel components are made in the USA without the metal additives used in the refining process.
The domestic content of the entire project must meet a threshold, and in many cases, it is difficult for manufacturers to meet this target with components and inverters,” says McKiernan. There are some domestic alternatives available, but they are very limited and will be oversold in the coming years. We want customers’ real focus to fall on the electromechanical balance of the system so that they can meet the domestic content requirements.”
At the time of publication of this article, the Treasury is seeking comments on the implementation and availability of the IRA Clean Energy Tax Credit. Questions remain regarding the details of prevailing wage requirements, qualification of tax credit products, and overall IRA progress-related issues.
Eric Goodwin, Director of Business Development at OMCO, said, “The biggest issues include not only guidance on the definition of domestic content, but also the timing of the first batch of projects, and many customers have the question, when exactly will I get this credit? Will it be the first quarter? Will it be on the 1st of January? Is it retroactive? Some of our customers have asked us to provide such relevant definitions for tracker components, but once again we have to wait for confirmation from the Ministry of Finance.”
Post time: Dec-30-2022