The Inflation Reduction Act (IRA) aims to expand both solar manufacturing and installation in the United States, with most provisions geared toward large-scale solar projects and the components used in them.
Credit: Solar Foundations USA
Solar trackers are the only type of solar racking included in the Sec. 45X manufacturing production tax credits in the IRA, leaving out other structures used in commercial and residential projects. These incentivized single-axis solar trackers are popular on utility- or large-scale solar projects because of the additional production they garner from pointing modules toward the sun throughout the day.
Arrays on rooftops, in parking lots and fixed-tilt ground mounts in smaller applications may not compare to trackers in terms of production, but those markets are still necessary for decarbonizing the grid. In the 2023 Top Solar Contractors List from Solar Power World, 288 of the 420 companies represented work in the residential market.
“There’s been no real direct correlation between the tax incentives and the cost of manufacturing the racking,” said Mike Zuritis, president of ground-mount racking manufacturer Solar Foundations USA. “I think it’s just a leg of the overall incentive programs that have been out there to help move the solar industry forward; and then just by that, the growth in the solar industry increases the demand on the racking, which flows down to us.”
The two direct incentives available to solar manufacturers are the 45X credits and the Advanced Energy Project ITC (Sec. 48C). 45X credits are available to tracker manufacturers based on the kilogram-weight of the torque tubes and structural fasteners they produce. The 48C credit is an incentive for companies starting new factories that produce solar modules, batteries and inverters; and existing factories that update facilities to reduce greenhouse gas emissions or implement other green practices like recycling programs.
The latter doesn’t include incentives for new racking factories either.
“We’re left on the sideline on those particular manufacturing credits,” said Andrew Strickland, general counsel for Unirac, a rooftop racking manufacturer. “Where we have been active looking at the IRA lately has been the domestic content bonus adder, and really that’s more a function of our customers asking for information from us so they can claim it.”
Solar projects that use domestically produced components are eligible for a 10% bonus credit when they opt for the PTC or ITC. Structural steel and iron products, which racking falls under, must be entirely made in the United States to qualify for this bonus credit. Other products in the array, considered “manufactured products,” must meet a certain threshold to be considered American-made.
Credit: Unirac
To verify that every component on an array qualifies for the domestic content credit, each manufacturer must provide production cost data for their respective product. If complete cost data of all the hardware isn’t gathered, then the array is ineligible for the bonus credit.
“So, everyone plays, or no one gets the credit,” he said.
Unirac’s clientele showed initial interest in qualifying for domestic content, but that has waned in the last few months, likely due to the complicated cost data requirements. Additionally, manufacturers might be hesitant to share product cost data with clients because it can disclose a company’s profit margins, Strickland said.
Despite the lack of IRA assistance for smaller-scale products, numerous U.S. rooftop solar racking manufacturers have been operating successfully without manufacturing incentives prior to the IRA. SPW spoke to many of these companies at RE+ 2023, and the general impression of the IRA is that, despite its lack of direct incentives for their products, it is still a benefit to the solar industry.
“It’s not perfect, but no piece of sweeping legislation is,” Strickland said. “You have to take time to iron some details out. For a lot of people in our position, we want to make sure it stays in place and we’re just part of it. It helps the industry as a whole, which helps us. Our benefits are indirect, but they’re real.”
