Update 08/12: The House of Representatives passed the IRA and President Biden is expected to sign it in the coming days. Here’s a deep dive into what’s in the bill for the solar + storage industry.

On August 7, the Senate passed the Inflation Reduction Act, which includes long-term solar and storage tax incentives, investments in domestic solar manufacturing and other critical provisions that will help decarbonize the electric grid with significant clean energy deployment.

The Inflation Reduction Act is expected to cut greenhouse gas emissions about 40% below 2005 levels by 2030, according to The New York Times. It includes a 10-year extension of the solar ITC at 30% for both residential and commercial/utility-scale projects, direct pay for nonprofit and governmental entities, a 30% ITC for standalone storage, manufacturing credits for solar components and much more.

Read SEIA’s guide to the solar and energy storage provisions here.

“Today is a monumental day for America’s clean energy progress and global climate leadership. With the passage of the Inflation Reduction Act in the Senate, solar and storage companies are one step closer to having the business certainty they need to make the long-term investments that decarbonize the electric grid and create millions of new career opportunities in cities and towns across the country,” said Abigail Ross Hopper, president and CEO of SEIA, in a statement.

“This legislation is the most transformational investment America has ever made in our climate future, and we are thankful to our members, the clean energy community and every one of our solar champions in Congress for their work to get us to this historic moment,” she continued. “The solar industry has set a goal to account for 30% of all U.S. electricity generation by 2030, and this legislation will be a catalyst for reaching that target. Now the work can begin to build out America’s clean energy economy with historic deployment, domestic manufacturing, investments in low-income communities, energy storage, smoother interconnection and so much more.”

The BlueGreen Alliance estimated the IRA’s climate and energy investments will create 9 million jobs over 10 years.

“This legislation demonstrates that we don’t have to choose between good jobs and a clean environment, as some falsely claim. The Inflation Reduction Act supports both. This bill will create good-paying union jobs across the country while driving down the emissions causing climate change. It will be a game-changer in growing clean energy, revitalizing manufacturing, and building resilient communities,” said BlueGreen Alliance executive director Jason Walsh, in a statement.

The House is planning to reconvene on Friday to pass the bill and send it to President Biden, according to The New York Times.

See a list of the manufacturing tax credits included in the bill here.

Solar Power World will parse out the official details of the bill as it moves through the federal government.

Kelsey is managing editor of Solar Power World and host of the Contractor's Corner podcast.

Does the new exemption cover already installed photo electric cells before 2022 for which refunds were cancelled?

Does the new bill apply to rental properties? Both commercial and single family residence rentals

When does the new act take effect? Will 2022 residential solar installs qualify fo rthe 30% or will they be limited to the 26%? I already have homeowners asking if they should hold off until 2023 to get the additional 4%.

30% Federal Tax credit is retroactive to Jan 1st 2022 .

Hi, Steve were can I get this information? I was about to sign solar today and my sales rep told me it will be 26% I asked her about the 30% new rate and she said that wont be until 2023 sometime. I told her that ill have to do my homework on this and ill sign when I know I’m getting the 30%. She isnt happy but thats a big chunk of change to walk away from. Can you help?

The bill has not passed the House or been signed by the President yet, so nothing is official.

They passed it and we are paying for it! Along with already higher gas and food prices! Why don’t they do something about that instead of killing jobs? Inflation and Government Decisions by certain people have already put tens of thousands of people out of Work!!

So should I wait to get it installed in 2023 at 30% or continue to get it installed in 2022 at 26%

Hi Kelsey – I read your article with great interest. My question is how will the “direct pay” be for nonprofits? I’m heading up a project for my community to go solar and we are an HOA nonprofit. I estimate our cost to be about $600,000. Will we get a check from the government for $180,000 toward the project cost? How and when can we apply … assuming the bill is signed this weekend?

Do you know of any other HOA that has gone solar?

Hi Kelsey: Does this include the 30% tax credit for residential solar hot water systems? The solar thermal industry is almost completely ignored by all of the major solar organizations, and is not mentioned in this article. Solar thermal is an underutilized technology, the collectors are six times as efficient as photovoltaic panels, yet the industry has been stripped of its incentives in every single state. I am hoping that the industry was not ignored in this new law, as it has been in every article about this subject that I could find.

Hi Kelsey I invested in a new Solar Company, Qube Solar LLC in Idaho. I listen to sales pitches from many companies and am still confused on how the Federal Investment Tax Credit actually works? I read it and understand the 40%, then 20% for three years making it 100% credit off the cost of the system you install. Where I get confused is how to best explain it to a potential homeowner. It is based off your income tax payment to the IRS but how does the total cost of each system get paid back in full to each homeowner over the four years? Is there a simple way to explain it, and now it will be 30%. Thank you Dennis Parker

Erik - ADT Solar says

Dennis, I believe you were sold on a bunch of lies. The tax credit is currently 26% of your gross system cost; and that Is all you can claim. In other words, for easy numbers, if your system is $100,000, you will only receive $26,000 from the government as a credit. If you do not pay any federal income taxes then you will not receive any money. If you do pay federal income taxes, then you will only receive back what you pay in. If your personal liability is, let’s say $10,000, then next year when you file you will be able to get $10,000 back, and the remaining $16,000 will roll over to the following year’s for you to claim. There is NO 100% free solar credit. This is why you have to get a loan

Okay, I sell solar, so here is how the ITC currently works. At present, there is a 26% ITC (Investment Tax Credit). We are going to pretend you just bought a solar system, and the total cost was $10,000.00. That means you can claim a $2,600.00 tax credit when you file your taxes in January. Now, this is the part where everyone goes crazy. You must have paid at least $2,600.00 in taxes to get that money back. If you only paid $1000.00 in taxes, you will only get $1,000.00 back this year. However, you can roll it forward for up to 3 years getting $1000.00 next year and $600.00 the following year. If you are 100% disabled and pay no taxes at all, you will not be able to take advantage of the ITC.

How does IRA reduce homeowner solar installation costs and change utility pay back?????

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