US to issue guidance on IRA manufacturing tax credits for wind turbine components

The US treasury will provide guidance on advanced manufacturing tax credits for clean energy components, known as section 45X tax credits, before the end of the year, according to a senior government official.

“The section 45X tax credit incentivises domestic production of crucial inputs to the clean energy economy, including blades for wind turbines, wafers for solar panels, electricity inverters, batteries, and critical minerals,” added the treasury department’s assistant secretary for tax policy, Lily Batchelder, in prepared comments.

The tax credit is contained in the Inflation Reduction Act of 2022. It is a per-unit tax credit based on eligible clean-energy units produced domestically, such as wind turbine blades and nacelles.

The credit starts to phase out in 25% increments for eligible components sold beginning in 2030, with no credit after 31 December 2032. 

According to Bloomberg Tax, if the component is a related offshore wind vessel, the tax credit would be for an amount equal to 10% of the sales price of the vessel.

The credit varies for different clean energy components. For a wind turbine component, it calculated per watt of the turbine it will be installed in:

  • Nacelle: $0.05/W
  • Blade: $0.02/W
  • Tower: $0.03/W
  • Fixed-bottom offshore wind foundation: $0.02/W
  • Floating foundation: $0.04/W