By signing the Inflation Reduction Act into law, President Biden takes a giant step towards setting our country on the path to reducing greenhouse gasses by 50%-52% below 2005 levels by 2030.
While the law has measures for health and taxes apart from energy, let us see how the Inflation Reduction Act will be useful to solar consumers and producers.
- Homeowners and commercial organizations who adopt a solar system will be eligible for a tax credit of 30% of the cost of installed equipment for solar solutions till 2032. It will reduce to 26% in 2033 and 22% in 2034. The credit will be retroactively applied to anyone who installed their system in 2022. It is a welcome change, as, under the earlier provision, residents could claim up to 26% for installations in 2022 and up to 22% in 2023. Beyond that, there were no incentives.
- Solar power projects eligible for the full 30% tax credit can increase their tax credit by an additional 10% – to 40% in total – by purchasing domestically produced hardware.
- The law proposes a $4,000 consumer tax credit for lower/middle income individuals to buy used clean vehicles and up to $7,500 tax credit to purchase new clean vehicles.
- The demand for batteries is on the rise. The new law ensures that energy storage projects are also eligible for tax credits. Even if they are stand-alone facilities, they will receive a 30% tax credit. Batteries connected to a solar power project will continue to qualify for the credit, even if they are not charged by solar power. Moreover, customers with an existing solar solution can retrofit a battery to it and take advantage of the credit.
For producers and manufacturers
- Manufacturers of solar components are also eligible for Production Tax Credits (PTCs). Companies manufacturing thin film photovoltaic cells, crystalline photovoltaic cells, photovoltaic wafers, solar grade polysilicon, polymeric backsheet, and solar modules will get tax credits. These will be higher if they meet specific wage and apprenticeship requirements.
- Solar power projects will receive 0.3 cents/kWh as PTC for 10 years. This will be adjusted for inflation. If the projects meet certain wage and apprenticeship requirements, it will receive a tax credit of 2.5 cents/kWh for the first ten years. Moreover, there are additional tax credits for solar providers that sell solar to low-income individuals via community solar projects.
- The law proposes to provide investment tax credits to build facilities that make electric vehicles and retool existing auto manufacturing facilities to manufacture electric vehicles. This could be advantageous to the solar energy providers. With the ease of availability of electric vehicles, support for solar installations and incentives to buy electric vehicles, consumers have the opportunity to go green with electric cars that can be powered by solar energy.
Be part of the clean energy transition
The law, when implemented, will kick start the era of affordable clean energy in America. It will be a game changer for solar consumers and solar providers. We @ GreenBrilliance will make the most of the provisions while implementing solar systems, so our customers get the maximum benefits. Contact GreenBrilliance @ 703-657-0090 or email@example.com to begin your solar journey and be part of this catalytic change.