By Brad Kramer | Managing Editor | Solar Builder
The solar tracker manufacturing market in the United States has seen rapid growth over the past year and a half thanks to tax incentives within the Inflation Reduction Act (IRA). A domestic content bonus within the law was meant to encourage more U.S. manufacturing to bolster the solar supply chain.
“The domestic content bonus under the Inflation Reduction Act will boost American manufacturing, including in iron and steel, so America’s workers and companies continue to benefit from President Biden’s Investing in America agenda,” said Secretary of the Treasury Janet L. Yellen in May 2023.
The domestic content adder in the IRA included tracker components like torque tubes and structural fasteners. In November 2023, Treasury and the IRS issued its long-awaited guidelines for the tax credit, confirming that eligibility will be determined by a “substantial transformation” test, meaning eligible products must be substantially transformed at a U.S. factory to be considered for the credit.
There are two eligibility tests for the adder: One for steel and iron, and another for manufactured products:
- Under the steel and iron test, 100% of the structural steel in new projects must be U.S.-made.
- The manufactured product test requires that 40% of the cost of manufactured products must be from U.S.-made products. The percentage increases by 5% each year for projects that start construction in 2025 and after, maxing out at 55%.
Fixed-tilt systems fall under the 100% steel and iron test. Trackers are considered a manufactured product and fall under the second test. (Read more about that in more depth here.)
While the math gets tricky on how to earn the domestic content tax credit, there’s no question that the incentive has driven U.S. solar tracker manufacturing since the IRA was passed in 2022.
RE+ in September 2023 seemed to be a flashpoint for the expanding domestic solar tracker market, with the announcement of numerous new and expanding production facilities to boost the U.S. supply chain for the solar market. The industry has seen several tracker manufacturers partnering with solar module manufacturers and steel suppliers to expand production and juice up their domestic content percentages