Big things are happening in the U.S energy sector which is all because of solar. If you have been following renewable energy then you must have heard about the Inflation Reduction Act (IRA).
But do you even know what that is?
The IRA was passed in August 2022 and it's a huge thing. It is a $369 billion promise to increase sustainable energy adoption in the United States. And a significant portion is going to solar energy development and manufacturing. Isn’t it huge? Well there’s more to know!
The goals of the IRA are as follows: reduce US greenhouse gas emissions by 40% till 2030, restore local manufacturing, and make solar electricity more accessible than before.
With a combination of hefty renewable energy tax credits, domestic production incentives, and job development initiatives, the IRA is transforming how and where solar panels and components are manufactured in the United States.
In this blog, we'll look at how the Inflation Reduction Act is changing solar manufacturing in America, which firms and states are leading the way, and what this means for the solar industry in 2025 and the future of solar.
For years, the U.S. solar industry had been keeping some secrets: even though the demand for solar power was and is still growing, the majority of solar panels were being imported from China. That means there are supply chain risks, limited control over costs and very less job creation on American land.
So here comes the Inflation Reduction Act.
This landmark legislation is the most important investment in clean energy in the U.S. history. The IRA is designed to change decades of underinvestment in the U.S. solar manufacturing and make the U.S. a global leader in renewable energy.
And the message with this act is clear- If you build it in the U.S, then you gain more profit.
The IRA has already made an impact. New factories are opening, more jobs are being created, and billions of dollars are being invested in domestic solar infrastructure.
So whether you're a manufacturer, a solar installer, or an energy-conscious household, this is the type of transformation you can only witness once. And it's huge!
Let’s explore how this all works, starting with the tax credits that fuel the solar boom.
Now if you’re wondering why everyone is suddenly interested in setting up solar manufacturing plants in the U.S., the answer is in three key tax incentives.
The 45X solar tax credit is huge for manufacturers. It offers direct cash incentives for making solar components like photovoltaic cells, wafers, modules, and polysilicon in the U.S.
This is not a deduction rather it’s a per-unit cash credit, which means that the companies get paid for every unit of solar material they make domestically. Isn’t that actually great? It leads to a huge boost in solar production capacity within the country.
Now whether you’re producing solar panels or individual parts, this solar production credit under the IRA makes local manufacturing financially viable again.
While 45X rewards production of the solar components, the 48C investment tax credit helps companies set up or expand manufacturing facilities for solar and other clean technologies.
This means that if you’re building a factory to produce solar modules, battery storage, or clean energy tech, you can get up to 30% of your capital investment back in the form of a tax credit. Now that’s BIG!
This incentive has been especially beneficial to companies that are planning long-term expansion in the clean energy space because it reduces risk and upfront capital requirements, the two things that often slow down large-scale manufacturing projects.
To strike the deal even more, the IRA provides a 10% bonus tax credit to projects that meet domestic content and labor standards.
This means if your solar project sources key materials like steel and aluminum from the U.S. and pays workers a good wage (or trains them through registered apprenticeships), you qualify for extra savings.
With this approach the benefits of the IRA are not just limited to companies, they also benefit the American workers, too.
You can create all the policies but to see them actually work is a different thing. That’s exactly what’s happening in key U.S. states, where the IRA is making huge changes for the manufacturing companies.
Some states have emerged as the ones that have been accepting the change.
Georgia is drawing billions of dollars in investment, with businesses such as Qcells expanding their operations to build what may become one of the largest solar manufacturing sites in the Western Hemisphere.
Ohio—which is already home to First Solar’s massive operations, is continuing to grow its clean energy footprint. The state is becoming a hub for solar glass and module production.
Texas, with its expansive land and business-friendly climate, is hosting new factories and supply chain facilities.
These solar manufacturing states are building a new energy economy from the ground up—literally.
Several manufacturers are already taking in on the IRA’s benefits.
First Solar, one of the largest U.S.-based solar companies has announced multiple new factory openings in the U.S., including a major investment in Louisiana. Their thin-film solar technology is in high demand, and IRA credits are making it easier to expand domestically.
Qcells, a South Korean company, is spending over $2.5 billion in solar manufacturing in the United States, including a fully integrated supply chain based in Georgia. They've made it obvious that they're preparing for the long run in the United States.
Now these are not just press releases, they’re real investments which clearly show the impact of the IRA.
Now it’s not just the U.S but the change and impact of the IRA can be observed globally.
Since a long time, China has been dominating the solar supply chain, especially in articularly in wafers, ingots, and modules. But with IRA backing the U.S, the U.S is getting back up.
Incentives under the IRA reduce the financial advantage of imports by supporting American alternatives. This reduces the dependence on the Chinese supply chains and also creates a more resilient and transparent ecosystem for solar deployment.
The idea is more than just economic. It's more strategic as this also impacts the global clean energy race and strengthens national security, and encouraging domestic manufacturing.
You wanna know the most exciting part? Companies aren’t just assembling solar modules here—they’re now producing wafers and ingots, which were previously almost entirely made overseas.
This vertical integration means the U.S. can build solar technology from raw materials to finished products all within its own borders. And that’s a big deal!
This push with solar module manufacturing IRA incentives is laying the foundation for a self-sustaining clean energy ecosystem for the U.S.
The Inflation Reduction Act (IRA) isn’t only transforming how solar energy is made and deployed, but it’s also redefining who gets to be part of the clean energy workforce. Due to this act, all the American workers working with solar panels, factory and in installations benefit from raising labour standards and new jobs.
To get full government benefits under the IRA, businesses must fulfill strict labor requirements, which include paying minimum wages and offering registered apprenticeship programs, so that it's not only in theory but a policy that benefits workers as much as it benefits the corporations.
Paying prevailing wages means that the workers are being compensated fairly for their experience as well as their expertise and location plus apprenticeships offer on-the-job training and open paths for career advancement.
As a result, there has been a positive force to have a skilled and stable clean energy workforce. All the community colleges, trade unions, and nonprofit groups across the U.S are working together with solar companies to launch new training programs to support entry-level workers from undersourced communities.
And this change is highly important and needed in areas that are transitioning from coal and oil because solar is offering a sustainable and beneficial alternative, so it's a win for all sides.
The predictions are in, and it looks promising. By the end of 2024, the U.S solar industry will employ 263,000 workers under various roles such as panel assembly, electrical engineering, project development, logistics and sales.
That number is expected to surpass 400,000 by 2030, according to reports from E2 and other energy think tanks. And the fastest growth is predicted to happen in the next few years, especially in 2025, thanks to the continued rollout of IRA-backed projects and manufacturing expansions.
These roles include both blue-collar and white collar jobs, providing opportunities to various communities across the country. The ripple effect goes beyond employment, generating tax revenue, revitalising local economies, and fostering new needs for education and training.
There’s no doubt the Inflation Reduction Act has been such a game-changer for the solar industry. But like all major federal policies, it’s not immune to political instability. While the IRA has opened doors for clean energy manufacturing and job growth, the reality is—its future could be shaped just as much by politics as by economics.
As much as it has opened doors for clean energy manufacturing and job growth, the future of the IRA could be controlled by politics as it is by economics.
Not everyone in Congress is on board with the IRA’s long-term vision. Some politicians, particularly those opposed to climate-focused spending, have already proposed budget changes that would eliminate renewable energy tax incentives, including those that drive solar industry expansion.
And their main arguments, you may ask? High costs, perceived government overreach, and opposition to certain labor or environmental provisions are tied to the incentives. These views are gaining numbers in budget hearings, and depending on how the political stance shifts, we may see genuine efforts to roll back sections of the law.
What happens in the 2026 elections and beyond could really affect whether these solar incentives stick around or get cut. If one political party takes control and decides to focus more on fossil fuels or cutting government spending, the tax breaks for solar energy might be one of the first things to go.
One of the biggest risks with this policy is how it affects stability in the market. Building solar factories isn’t something you can do quickly—it takes years of planning, construction, hiring people, and securing money to get things off the ground.
If companies worry that tax credits might be taken away or reduced halfway through a project, they might not want to invest at all. And that’s not just bad for business—it could lead to fewer jobs, paused construction, and falling behind on our clean energy goals.
Already, some manufacturers and investors are voicing concerns over the lack of a “guaranteed runway.” They want assurance that the benefits which have been promised won’t disappear tomorrow.
That’s why many in the clean energy sector are calling for a bipartisan commitment to IRA incentives. Regardless of political affiliation, there’s a growing understanding that long-term policy certainty is essential for America to compete globally in solar manufacturing.
So, let’s see where all of this is headed.
The Inflation Reduction Act has already gotten the solar industry moving but the real changes are just beginning. As we head into 2025 and beyond the US is going to be a major player in solar manufacturing globally – something that seemed impossible just a few years ago.
BloombergNEF experts say by 2030 the US could triple its solar manufacturing capacity thanks to government support and smart investments. That kind of growth will put the US in direct competition with countries like China and India which currently dominate the world in making solar wafers, panels and modules.
But it’s not just about playing catch up. Some experts think the US could actually lead the way in solar innovation—coming up with new tech, building stronger supply chains, and raising the bar on things like sustainability and fair labor practices.
As more states build out their solar factories and clean energy tax credits keep attracting investors, the US solar industry will become more self sufficient. That means everything—from raw materials to fully assembled solar panels—could be made here at home.
Of course all of this depends on policies staying consistent. If the tax credits and other support from the Inflation Reduction Act continue, the future for US solar looks bright.
In short we’re at a moment. The groundwork has been laid and now the world is watching. If we stick to the plan 2025 could be the start of a whole new chapter where the US is a global leader in solar energy—not just how much we use—but how we make it.
The Inflation Reduction Act has opened up a lot of new opportunities and to really take advantage of them, people need to act. Whether you’re a solar developer, a manufacturer, or an investor, now’s the time to get involved and plan for long-term success in this fast-growing industry.
If you're working on solar projects, you can earn an extra 10% bonus tax credit by meeting certain requirements. This is on top of other tax benefits like the Investment Tax Credit (ITC) and Production Tax Credit (PTC). To qualify, your projects need to use U.S.-made materials like steel and aluminum and follow labor rules, like paying fair wages and offering apprenticeships. It might take a bit more planning, but the rewards can be worth it both financially and in how your project is viewed.
Manufacturers are at the heart of this clean energy shift. The 45X tax credit gives you cash back for every solar part—like panels, cells, and wafers—that you make in the U.S. On top of that, the 48C tax credit helps cover 30% of the cost if you’re building or expanding a solar manufacturing facility. These incentives help lower your costs and make it easier to grow your operations while building a stronger U.S.-based supply chain.
Investing in clean energy isn’t just about doing good for the planet—it also makes financial sense. Supporting companies that meet IRA rules means you’re backing projects that are set up for long-term success, with steady tax benefits and growing demand. With support locked in through at least 2032, now’s a great time to get in while the momentum is strong.
Need guidance? The Department of Energy and IRS websites offer detailed instructions on claiming IRA credits and ensuring your project stays compliant with all solar incentive rules.
What are the key IRA solar tax credits?
The two major ones are the 45X Production Tax Credit and the 48C Investment Tax Credit. Both offer financial incentives to U.S.-based solar manufacturing.
Who qualifies for the domestic content bonus?
Projects that use U.S.-made steel, aluminum, and solar components and follow prevailing wage/apprenticeship guidelines.
How long will these incentives last?
Many of the credits are available until at least 2032, giving stakeholders a long runway to invest.
Can foreign firms benefit?
Yes, if they manufacture within the U.S. and meet eligibility criteria.
What’s the difference between PTC and ITC?
The Production Tax Credit (PTC) rewards energy production over time. The Investment Tax Credit (ITC) gives an upfront discount based on project costs.
The Inflation Reduction Act is more than just policy—it’s a turning point for the U.S. solar manufacturing industry. From tax credits to labor standards to domestic sourcing, the IRA is laying the groundwork for a cleaner, more independent energy future.
As we look ahead, this moment represents an opportunity to reimagine how we produce, source, and scale solar power in America. But to make the most of it, stakeholders need the right tools.
That’s where platforms like ARKA 360 come in. With smart solar design & proposal software, ARKA 360 helps developers and professionals align their projects with the latest IRA incentives, while saving time and reducing permitting headaches.
The future of U.S. solar is being built right now. Are you ready to be part of it?
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