The Inflation Reduction Act, signed into law last August, aimed to curb inflation and invest in domestic energy production. But energy companies are finding it hard to qualify for the tax credits. The Act contains tax breaks for solar and wind companies to buy American equipment. The law offers tax credits that could cover up to 70% of a renewable energy project's cost as long as it supports American workers and communities. - But guidance from the Biden administration has shown that checking off the boxes to gain those credits is nearly impossible.
- For example, Qcells, a solar panel manufacturing plant, was told that Summit Ridge Energy would purchase 2.5 million solar panels. But the Biden administration is requiring that the solar cells, not just the panels, are made in the U.S., which Qcells won't be able to produce until late next year. This leaves Summit Ridge Energy scrambling to find a cheaper option.
- "There's not a single solar manufacturer who fully qualifies for this at this moment in time, which makes it difficult and is actually starting to cool investment," said Leslie Elder, Summit Ridge's vice president of political and regulatory affairs. "Now we have to re-evaluate based on what can pencil."
- The incentive aimed at U.S. manufacturers makes domestic solar panels 30% less costly to produce than importing them. With incentives, the total cost of producing utility-scale solar electricity could potentially be 68% less than it is now.
|
