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Manchin’s clean energy deal includes credits for solar manufacturing, standalone storage

In a shocking turn of events late Wednesday afternoon, Sen. Joe Manchin of West Virginia announced that he had reached a deal with Majority Leader Chuck Schumer on a budget reconciliation package that includes $369 billion for clean energy and climate change.
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In a shocking turn of events late Wednesday afternoon, Sen. Joe Manchin of West Virginia announced that he had reached a deal with Majority Leader Chuck Schumer on a budget reconciliation package that includes $369 billion for clean energy and climate change.

Manchin, a year-long holdout over Democrats' plan to use the once-in-a-decade reconciliation process to push through the most ambitious climate and clean energy package in Congress' history, had said his most recent obstructionist efforts were due to inflation concerns plaguing the U.S. economy.

Manchin said the agreed-upon legislation, dubbed the Inflation Reduction Act of 2022, honors "input from all sides" and would cut costs for Americans.

Even before the legislative text was made available later in the evening, clean energy advocates rushed to offer support, and relief, for the negotiation's end.

“With long-term incentives for clean energy deployment and manufacturing, the solar and storage industry is ready to create hundreds of thousands of new jobs and get to work building out the next era of American energy leadership," Abby Ross Hopper, CEO of the Solar Energy Industries Association, said in a statement. "This is a crucial window of opportunity that we cannot miss, and now Congress must seal the deal and pass this legislation.”

Subscribe today to the all-new Factor This! podcast from Renewable Energy World. This podcast is designed specifically for the solar industry and is available wherever you get your podcasts.

Listen to the latest episode featuring Nextracker founder and CEO Dan Shugar.

Intersect Power CEO Sheldon Kimber was among those offering cautious optimism Wednesday.

Manchin's previous agreement on budget reconciliation, which later fell through, prevented a full-throttled victory lap for many.

"Now let's see if we progressives and climate advocates can manage to keep from tripping over each other's shoelaces here at this unexpected finish line," Kimber wrote on LinkedIn.

A summary document of the legislation that was released by Democrats claims it would reduce carbon emissions by roughly 40% by 2030.

Renewable Energy World will continue to update this story with analysis of the legislation and reactions from the clean energy industry.

What's in the Inflation Reduction Act of 2022 for clean energy?

New investment tax credit for standalone energy storage

Clean energy advocates have long called for a tax credit for energy storage systems that are not paired with wind or solar projects.

The legislation would expand the Section 48C Advanced Manufacturing Tax Credit to include up to a 30% credit for energy storage when all elements are realized.

Domestic solar manufacturing

Nearly all of the components of the Solar Energy Manufacturing for America Act (SEMA) are included in the budget reconciliation agreement.

  • 11 cents/watt for integrated modules
  • 7 c/w for non-integrated solar modules
  • 4 c/w for cells
  • $12/sq. m. of wafer
  • $3/kg of polysilicon
  • 40 c/sq. m. of polymeric backsheet

Politico reported that direct payments, instead of tax credits, will be included for domestic manufacturing for five years, but aren't expected to extend broadly to other clean energy incentives.

Domestic manufacturing credits within the SEMA Act have gained attention because of a trade case against solar module imports that recently brought the industry to a standstill.

President Biden paused for two years new tariffs against four Southeast Asia countries that are the subject of a Dept. of Commerce antidumping and countervailing duties investigation, giving the industry a runway to ramp up domestic manufacturing.

Rebuilding the U.S. solar supply chain could take 2-3 years with the appropriate incentive structures in place, experts say.

Extension of residential and utility-scale solar tax credit

The legislation extends and fully funds the Section 25D residential solar tax credit at 30% for 10 years. The so-called residential Investment Tax Credit (ITC) would down to 26% in 2033 and 22% in 2034.

The existing residential ITC is in the process of phasing out. This year, it stands at 26% and is set to phase down to 22% in 2023. The credit would expire in 2024 without an extension.

The commercial ITC for utility-scale projects under Section 48 would be extended for another 10 years under the Inflation Reduction Act. Projects would be eligible for up to a 30% credit.

Electric vehicle tax credits

The $7,500 "clean vehicle" tax credit would continue through Dec. 31, 2032. A new $4,000 credit for used EVs, with restrictions, is included in the legislation.

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