US Senators Call for Incentivizing Domestic Production of Solar Wafers – Mercom India

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A group of U.S. senators has asked Treasury Secretary Janet Yellen to ensure that domestic production of wafers and polysilicon used in the manufacturing of solar modules is appropriately incentivized.

In a letter, the 12-member group of Democrat senators said the goal of the domestic content bonus tax credit for clean energy under the Inflation Reduction Act was to onshore the energy supply chains in their entirety.

“In order to cultivate a strong domestic manufacturing industry, disrupt China’s dominance of the solar supply chain, and bolster U.S. energy and national security, it is essential that these critical solar energy components be manufactured in the United States. Your current guidance, which draws the line at the cell level, falls short of that important goal,” the senators said.

The domestic content incentive provides an additional bonus credit to clean energy installers and developers who use goods made in the U.S.

Congress intended this credit to serve as a direct complement to the manufacturing incentives provided in Section 45X, create a clear demand signal in the market for U.S.-made products, and spur new capital investments in clean energy manufacturing.

“However, the initial guidance that the Treasury and the IRS released last May undermines building out a comprehensive American solar supply chain. China currently controls nearly 100 percent of global wafer production and almost 80 percent of global polysilicon production, two of the most labor- and capital-intensive parts of the solar supply chain,” the letter said.

The new Section 45X provides a credit for the production within the U.S. and sale of solar and wind energy components, inverters, qualifying battery components, and applicable critical minerals. Eligible solar components include solar modules, photovoltaic cells and wafers, solar-grade polysilicon, torque tube, structural fastener, or polymeric backsheet.

The senators urged Yellen that the domestic content bonus must adequately account for the value that domestic wafers and polysilicon contribute to a finished solar product. The regulations must also evaluate solar products separately from other technologies used in a project, such as storage.

To end China’s control of the solar market, the group emphasized that any regulations or guidance must be consistent with the legislative intent of Congress and send a strong signal that the U.S. prioritizes the development of a robust, lasting marketplace for American-made wafers and polysilicon.

The senators’ call to incentivize the production of wafers and polysilicon in the U.S. comes in the background of China’s near monopoly in solar manufacturing. A Wood Mackenzie report last November said China would account for more than 80% of the world’s polysilicon, wafer, cell, and module manufacturing capacity until 2026.

The report highlighted that despite the increase in solar supply across markets outside China, a module made in China is 50% cheaper than that produced in Europe and 65% cheaper than in the U.S.

Of late, some U.S. companies have announced plans for wafer manufacturing. Last October,  the North American arm of South Korea-based Qcells announced it was developing a fully integrated solar supply chain factory in Cartersville, Georgia, which will include the production of solar wafers, ingots, cells, and finished panels.

In January, Germany-based solar wafer manufacturer NexWafe established a subsidiary in the U.S. to explore establishing a multi-gigawatt scale production facility with an initial capacity of 6 GW.

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