Solar wafer manufacturing qualifies for 25% CHIPS ITC

In addition to qualifying for various credits established in the Inflation Reduction Act, silicon ingot and wafer manufacturing operations for the solar industry can take advantage of the 48D Advanced Manufacturing Investment Credit (CHIPS ITC) created in the CHIPS and Science Act. Final rules for the CHIPS ITC were released today by the Treasury Dept., and although the Act is intended to support the general semiconductor market, solar wafer manufacturing is mentioned.

The guidance gives taxpayers clarity into their domestic semiconductor manufacturing investments. The CHIPS ITC is generally equal to 25% of the basis of any qualified property that is part of an eligible taxpayer’s advanced manufacturing facility if the qualified property is placed in service after December 31, 2022, and covers construction occurring after the enactment of the CHIPS and Science Act on August 9, 2022.

The final rule clarifies that semiconductor wafer production includes the production of wafers used for solar PV generation. Treasury and IRS, with the Dept. of Energy and other agencies, will continue to evaluate additional options to further incentivize domestic production of the full solar supply chain, including solar wafers.

“Today’s final guidance provides critical certainty for semiconductor and solar manufacturers to make generational investments in communities across the country,” said Lael Brainard, National Economic Advisor to the White House. “Semiconductor investments are supporting over 125,000 jobs and will ensure that the United States leads the world in advanced manufacturing not just for the next few years, but for the next few decades.”

Semiconductor wafer production for electronics and solar cells generally follow the same processes. A silicon solar panel first starts as polysilicon, which is melted and shaped into ingots, sliced into wafers, doped into cells and then assembled into strings as a final solar panel.

“Treasury’s final rules will create new opportunities for solar manufacturers and encourage the upstream development of the solar supply chain,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA). “Supply chain accessibility and security remains one of our biggest challenges in the U.S. solar and storage industry. While the United States is a global leader in module manufacturing, we don’t have any ingot and wafer facilities in operation yet, representing a critical gap in the solar supply chain.”

Currently, Qcells is building the only ingot and wafer production line in the United States. Qcells intends to use all of the wafers produced there in its own solar cells and panels assembled in Georgia. There are no other wafer manufacturing operations even under construction in the country. The 25% CHIPS ITC may help push operations over the finish line.