The advanced manufacturing production tax credit (Section 45X) under the Inflation Reduction Act (IRA) offers several key benefits for energy storage manufacturing and deployment:
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Direct financial incentives for battery production
The credit provides $35 per kWh for battery cell manufacturing and $10 per kWh for battery module assembly, significantly reducing production costs and improving competitiveness against foreign manufacturers. -
Domestic supply chain development
By requiring U.S.-based production for eligibility, the credit incentivizes localized manufacturing of critical energy storage components, reducing reliance on global supply chains and strengthening national energy security. -
Long-term support with phased incentives
The credit applies to components sold between 2022 and 2032, with a phase-out starting in 2030 for manufactured components (but no phase-out for critical mineral production), providing market stability for long-term planning. -
Job creation and energy community investment
The tax credit supports high-paying domestic jobs and promotes manufacturing investments in historic energy communities, aligning economic and environmental goals. -
Enhanced project economics
The availability of direct pay and credit transferability under IRA provisions (Section 48/48E ITC) allows developers and manufacturers to monetize credits more efficiently, improving cash flow for projects. -
Technology-neutral mineral incentives
Critical minerals used in battery production qualify for a 10% credit of production costs, independent of specific battery chemistries, encouraging innovation in energy storage materials.
Impact: These provisions have made energy storage one of the IRA’s major beneficiaries, accelerating domestic manufacturing capacity and deployment of grid-scale storage systems.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-benefits-of-the-new-advanced-manufacturing-production-tax-credit-for-energy-storage/
