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					</table><p>Solar, wind, and battery energy storage systems (BESS) projects in the United States will be eligible for a bonus credit of 10% of the project cost if they meet domestic manufacturing requirements under the Inflation Reduction Act (IRA).</p>
<p>The <a href="https://home.treasury.gov/" target="_blank" rel="noopener">U.S. Department of the Treasury</a> and the <a href="https://www.irs.gov/" target="_blank" rel="noopener">Internal Revenue Service</a> recently released new guidelines for the domestic content bonus.</p>
<p>Project must have a maximum net output of less than 1 MW, and must have begun construction before January 29, 2023. Alternatively, they satisfy prevailing wage and apprenticeship requirements set forth by the IRA to qualify for the bonus.</p>
<p>The bonus applies to projects built using a specified quantity of domestic-produced steel, iron, and manufactured products. The IRA currently <a href="https://www.mercomindia.com/inflation-reduction-act-faster-transition-clean-energy-u-s" target="_blank" rel="noopener">offers</a> a tax credit of 30% for renewable energy projects. To qualify, the IRA requires that all iron or steel products for a project be domestically melted and poured and that 40% of the cost of manufactured products be produced in the U.S.</p>
<p>The percentage would rise for projects that start construction after 2024 and eventually reach 55% after 2027.</p>
<p>All steel and iron manufacturing processes in significant structural components must occur in the United States to receive the bonus credit.</p>
<p><strong>Solar</strong></p>
<p>The applicable components that fall under the categorization for solar projects include module racking, pile or ground screw, trackers, module (cells, mounting frame, back rail, glass, encapsulant, back sheet, junction box, edge seals, pottants, adhesives, bus ribbons, and bypass diodes), inverters, and steel or iron rebar in foundation.</p>
<p><strong>BESS</strong></p>
<p>The components for BESS projects include battery pack (cells, packaging, thermal management system, and battery management system), housing, Inverters, and steel or iron rebar in the foundation.</p>
<p><strong><a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Solar-and-Battery-Energy-Storage-Projects.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-53936 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Solar-and-Battery-Energy-Storage-Projects.png" alt="Categorization of Applicable Components for Solar and Battery Energy Storage Projects" width="758" height="501" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Solar-and-Battery-Energy-Storage-Projects.png 758w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Solar-and-Battery-Energy-Storage-Projects-300x198.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Solar-and-Battery-Energy-Storage-Projects-650x430.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Solar-and-Battery-Energy-Storage-Projects-624x412.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Solar-and-Battery-Energy-Storage-Projects-600x397.png 600w" sizes="(max-width: 758px) 100vw, 758px" /></a></strong></p>
<p><strong>Wind</strong></p>
<p>The components for land-based wind facilities include towers, steel or iron rebar in the foundation, wind turbines (nacelle, blades, rotor hubs, and power converters), and wind tower flanges.</p>
<p>The components for offshore wind facilities include towers, jacket foundations, wind tower flanges, wind turbines, transition pieces, monopile, inter-array cables, offshore substations, and export cables.</p>
<p><a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Wind-Energy-Projects.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-53934 " src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Wind-Energy-Projects.png" alt="Categorization of Applicable Components for Wind Energy Projects" width="649" height="569" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Wind-Energy-Projects.png 702w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Wind-Energy-Projects-300x263.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Wind-Energy-Projects-650x569.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Wind-Energy-Projects-624x547.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/Categorization-of-Applicable-Components-for-Wind-Energy-Projects-600x526.png 600w" sizes="(max-width: 649px) 100vw, 649px" /></a></p>
<p>However, the requirement does not apply to steel or iron subcomponents such as nuts, bolts, screws, and clamps used in renewable energy projects.</p>
<p>These new guidelines are expected to support American manufacturers by incentivizing domestic manufacturing and using American-made products in solar projects.</p>
<p>Recently, the Biden administration <a href="https://mercomindia.com/us-56-million-innovation-solar-manufacturing-recycling/" target="_blank" rel="noopener">announced</a> $56 million in funding alongside new initiatives to augment the innovation in solar manufacturing and recycling to make energy more cost-effective and create more jobs.</p>


Solar, Wind, BESS Projects Using Made-in-US Content Eligible for a 10% Bonus


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					</table><p>The members of the <a href="https://www.europarl.europa.eu/portal/en" target="_blank" rel="noopener">European Parliament</a> have reached a deal to implement the Carbon Border Adjustment Mechanism (CBAM) effective 2023, to incentivize non-EU countries to enhance their climate goals and ensure the region’s efforts are not undermined by production being relocated to countries with less competitive policies.</p>
<p>The regulation will initially cover iron and steel, cement, aluminum, fertilizers, and electricity. It will be extended to hydrogen, indirect emissions under certain conditions, specific precursors, and some downstream products such as screws and bolts and similar articles of iron or steel.</p>
<p>The fast-forwarded CBAM regulation intends to assess companies and their products being imported into the EU for indirect emissions.</p>
<p>The first-of-its-kind bill, which complies with the World Trade Organization rules, will be applicable from October 1, 2023. The bill provides for a transition period where the obligations of the importer will be limited to reporting.</p>
<p>Before the end of the transition period, the Commission would assess whether to extend the scope to other goods at risk of carbon leakage, including organic chemicals and polymers, with the goal of including all goods covered by the Emissions Trading System (ETS) by 2030.</p>
<p>The Indian industries, including the commercial and Industrial (C&amp;I) segment, especially those exporting aluminum, iron, and steel to the EU, will have to meet these standards much faster than before.</p>
<p>Even though the segment has seen considerable adoption of renewables, a majority still has to make the transition.</p>
<p>With the CBAM regulations advanced to October 1, 2023, companies in countries like India will have to fast forward their sustainability goal timelines to continue their exports.</p>
<p>CBAM is set up to equalize the price of carbon paid for EU products operating under the ETS and the one for imported goods. It will be achieved by obliging companies that import into the EU to purchase CBAM certificates to pay the difference between the carbon price paid in the country of production and the price of carbon allowances in ETS.</p>
<p>The EU member states and parliamentarians recently <a href="https://mercomindia.com/eu-reaches-deal-on-market-reform-to-cut-emissions-by-2030/" target="_blank" rel="noopener">agreed</a> on a significant ETS reform to help reduce emissions and encourage investments in climate-friendly technologies.</p>
<p>CBAM is part of the “Fit for 55 in 2030 package,&#8221; which is the EU’s plan to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels in line with the European Climate Law.</p>
<p>Parliament and Council must approve the agreement before the new provision becomes law.</p>


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