Domestic Content Compliance
Learn how to utilize the Federal Tax Credits
American Solar Industry
The U.S. solar industry has experienced rapid growth over the past decade, driven by technological advancements, decreasing costs, and strong policy support. Solar power now accounts for a significant portion of the nation's renewable energy capacity, reducing carbon emissions while creating thousands of jobs in manufacturing, installation, and maintenance.
Government incentives, including federal tax credits and state-level programs, have been instrumental in accelerating solar adoption. With increasing emphasis on domestic manufacturing, the industry is shifting towards greater reliance on U.S.-produced components to support energy independence and sustainability.
Qualifying Brands
Available Tax Credits & Incentives
Investment Tax Credit (ITC)
The Investment Tax Credit (ITC) is a one-time federal tax credit that allows solar project owners to deduct a percentage of their total project costs from their federal tax liability.
Base ITC Rate: 30% of total project costs.
Bonus ITC: Projects can qualify for additional credits, including a 10% Domestic Content Bonus if U.S.-made components meet required thresholds.
Eligibility: Applies to residential, commercial, and utility-scale solar projects.
The ITC is particularly beneficial for projects with high upfront capital costs, as it provides an immediate tax benefit to help offset investment expenses.
Production Tax Credit (PTC)
The Production Tax Credit (PTC) is an output-based incentive that provides a per-kilowatt-hour (kWh) credit for electricity generated from renewable energy sources over a 10-year period.
Base PTC Rate: A fixed amount per kWh generated (adjusted annually for inflation).
Bonus PTC: Like the ITC, projects can receive an additional 10% bonus for meeting Domestic Content requirements.
Best For: Utility-scale solar farms that generate high volumes of electricity over time.
While the ITC is best for projects with high upfront costs, the PTC is advantageous for projects that prioritize long-term energy generation.
Additional Incentives
State-Level Incentives: Many states provide tax credits, rebates, and performance-based incentives to improve the financial benefits of solar projects.
Net Metering Programs: In several regions, surplus solar energy can be sold back to the grid, creating extra income.
Accelerated Depreciation (MACRS): Businesses can write off solar investments faster, leading to higher tax savings.
Developers
Maximizing Tax Benefits – Developers can arrange projects to qualify for tax incentives and improve their value.
Investor Attraction – Meeting local content rules can make projects more appealing to tax investors.
Procurement Strategy – Collaborating with EPCs and suppliers ensures the right materials are sourced early in the design.
CPA & Tax Advisory – It’s important to consult a CPA who knows renewable energy tax incentives for compliance and claim verification.
EPC’s
Sourcing Suitable Materials – EPCs must buy and document compliant components to meet local content rules.
Managing Cost & Compliance – U.S.-made products may be more expensive, needing a careful buying strategy.Verification of Compliance – Keeping accurate records ensures materials meet IRS standards and are ready for audits.
Manufacturer Connections – More manufacturers are willing to share cost information with outside consultants instead of directly with clients.
