With domestic manufacturing of solar energy components reaching a new milestone this month — technically achieving enough capacity (at full operational efficiency) to meet U.S. demand — commercial real estate owners are asking about domestic content in their solar projects, and there are good reasons why.
In addition to supporting U.S. manufacturing and achieving supply chain stabilization, there’s a 10% bonus added to the solar Investment Tax Credit (ITC).
The Solar Energy Industries Association (SEIA) announced on Feb. 3, 2025, that the U.S. solar industry has surpassed 50 GW.
“The U.S. is now the third largest module producer in the world,” said SEIA president and CEO Abigail Ross Hopper. “This milestone not only marks progress for the solar industry but reinforces the essential role energy policies play in building up the domestic manufacturing industry that American workers and their families rely on.” Read the full article here.
The Inflation Reduction Act (IRA) introduced bonus tax credits for solar projects using U.S.-manufactured materials and components. This incentive, known as the domestic content adder, can increase the ITC by up to 10%, making solar even more financially attractive for commercial real estate owners, developers, and investors.
What qualifies? To earn the additional credit, a project must use certain percentages of steel, iron, or manufactured products that were mined, produced, or manufactured in the United States — including solar panels, racking, and inverters.
The financial impact: If a project qualifies for the standard 30% ITC, the domestic content adder could increase it to 40% — which can be a game-changer for project ROI.
Who benefits most? Businesses looking to enhance tax efficiency while meeting sustainability goals.
Recent data underscores a significant expansion in U.S. solar manufacturing:
To provide a clearer picture of this expansion, the U.S. Department of Energy offers a comprehensive Solar Photovoltaic Manufacturing Map. This resource details active manufacturing sites contributing to the solar supply chain across the country.
Supply chain limitations: U.S. manufacturing is ramping up, but availability of fully domestic solar components is still catching up.
Cost vs. benefit trade-off: Some domestic components come at a premium, which must be weighed against the additional tax credit.
Verification process: Businesses need to ensure compliance with domestic content rules to claim the adder.
Despite good intentions, many businesses misunderstand the rules for the domestic content adder. Here are some common missteps:
1. Misidentifying what constitutes “domestic”: Some businesses assume that assembling imported components in the U.S. qualifies, but only materials that meet specific domestic sourcing thresholds are eligible.
2. Having incomplete supplier documentation: Without proper certifications from suppliers, proving domestic content compliance can be difficult, leading to disqualification.
3. Assuming that the entire PV system must be U.S.-made: There are multiple pathways to meeting the domestic content threshold, which could be a combination of panels, racking, or inverters. Some solar developers are meeting criteria just by using U.S. solar panels, while others are complying through a combination of racking and inverters.
4. Performing last-minute compliance checks: Waiting until late-stage procurement to confirm compliance often leads to unexpected disqualifications and delays.
While the opportunity for increased incentives is substantial, businesses must weigh the reality of procurement challenges and project feasibility when pursuing the domestic content adder. A strategic approach — balancing financial benefits with supply chain considerations — will be key in determining whether this incentive is truly viable for a given solar project.
SolarKal’s proprietary marketplace emphasizes transparency and accountability for our solar projects. Our team of experts will work with you to clearly explain the risks and rewards of a PV system that utilizes domestic content as well as ensure price protection for you and your project.
For companies evaluating commercial solar, understanding how to qualify for the domestic content adder can unlock significant financial benefits. SolarKal’s experts help navigate procurement strategies to determine if sourcing U.S.-made components aligns with your goals.
👉 Ready to see how the domestic content adder could impact your solar investment? Let’s talk.
Note: The information provided in this blog is intended as a general guideline for commercial solar projects. SolarKal is not a tax advisor, and this content should not be considered tax, legal, or financial advice. Always consult a qualified tax professional regarding your business's specific circumstances.
Connect With an Expert
Check Qualification on Your Projects
Check Qualification on Your Projects
.png)