Solar Spotlight: Building a domestic content strategy

The Trump Administration has reversed Inflation Reduction Act tax incentives that have bolstered solar’s domestic manufacturing and installation footprints. While they technically are still active, these credits are operating with a shorter runway. On this episode of Solar Spotlight, Liz Reicherts, Global Head of Government Affairs, and Kleber Facchini, Director of CC&I Products & Applications at SolarEdge, discuss the state of domestic solar subsidies and how to use them while they’re still intact. Additionally, SolarEdge has partnered with solar mounting company Enstall and its subsidiaries, IronRidge and Panelclaw, to help PV contractors qualify for domestic content incentives.

A written portion of this podcast is below but be sure to listen to the full episode here or on your preferred podcast service.

 

SPW: Liz, let’s start with the regulatory landscape. What changed with HR1 — or the one big, beautiful Bill Act — regarding domestic content bonus credits, and why should solar project developers care about this right now?

Liz Reicherts: Yeah, there were several impacts to the tax credits in HR1 for the domestic content bonus. The law fixed a congressional drafting error that was in the inflation reduction act under Section 48 Cap E. So, projects that begin construction after June 16, 2025, now need to meet 45% domestic content instead of 40% to obtain the domestic content bonus adder of 10%, and then there’s an annual 5% increase after that. So, in 2026 you’ll have to meet 50% domestic content, and in 2027 55%.

Can you break down what PFE and FEOC compliance actually mean in practical terms, like, what do project developers need to understand about these requirements, including which components they apply to, and what documentation is needed to maintain their tax credit eligibility?

LR: Yeah, it’s a bit complicated, and we are waiting on additional guidance from the Dept. of the Treasury, so FEOC rules will continue to evolve. But let me try to break it down as simple as possible with what we know today. So first, FEOC, which stands for foreign entity of concern, is defined by Russia, North Korea, Iran and China. Here we’re really talking about restrictions on Chinese components. PFE stands for prohibited foreign entity. The definition of PFE includes both specified foreign entities, or SFE, and foreign influenced entities, FIE. These are all new terms that were defined in HR1.

Kleber, handing it over to you. What are you seeing in the market? How are customers responding to these domestic content requirements, and what’s making the difference between those who embrace it vs. those who are hesitant?

Kleber Facchini: The domestic content bonus credit has gained a lot of interest, especially in the past year when domestically manufactured products became a reality, with inverters and with racking. We really started to have that available. That’s when the interest really started to gain momentum. We started seeing a big divide in the industry. We have the big players, the large scale customers. They’ve done their homework, locked into their positions and safe harbor products. And for them, this is not just an opportunity. This is their long term strategy.

How is SolarEdge helping customers navigate and simplify this compliance process? What’s been the response from those customers who have adopted your domestic content solutions?

KF: When we look at the challenges developers are facing with domestic content compliance, we realized that the market needed more than just information. We needed a clear path forward, so we focused on helping customers on several fronts: Providing guidance and education, partnering with key suppliers, creating practical solutions that simplify compliance.

 

This podcast is sponsored by SolarEdge