Rethinking Industrial Policy: The Advanced Manufacturing Production Tax Credit

Unlike previous efforts to restore U.S. manufacturing competitiveness, the Section 45X Advanced Manufacturing Production Tax Credit (AMPTC) has unleashed a new wave of domestic energy manufacturing investment. Rather than simple capital expense support as has been tried in the past, the 45X AMPTC support is specifically directed at making investments in the domestic production of components and processing critical minerals profitable. In other words, it encourages domestic manufacturers to go big and go fast - exactly what is needed to give us the best chance of leveling the playing field with China and maintaining an advanced and innovative U.S. energy manufacturing sector for years to come. The 45X AMPTC is a crucial pillar in financing new and innovative American solar and battery manufacturing facilities, which reduce reliance on Chinese supply chains and drive technological innovation and efficiency gains for the whole industry.

What is the 45X Advanced Manufacturing Production Tax Credit? 

The 45X AMPTC provides direct incentives to manufacturers for producing and selling to customers the core components of the solar supply chain, ensuring that the U.S. regains complete control over the industry and is not left reliant on foreign sources for upstream materials or components. It does this by hitting directly at the heart of the problem. Instead of trying to coax investment by lowering the cost of capital, it directly targets the cost difference between a domestically produced component and a subsidized imported one, creating a more level playing field for the goods produced by the factory. This new approach has enabled billions of dollars in private-sector investment, resulting in thousands of good-paying, high-quality factory jobs across America.

45X Eligible Solar Components & Credit Values:

• PV wafers: $12 per square meter.
• Thin-film or crystalline PV cells: $0.04 per watt.
• PV modules: $0.07 per watt.
• Polymeric back sheets: $0.40 per sq meter.
• Solar-grade polysilicon: $3 per kilogram.

Leveling the playing field with China

By creating incentives that fundamentally distort the global market and create massive production surpluses, the Chinese government has pushed much of the rest of the world out of manufacturing solar energy and battery components. This is a core component of their aim to achieve global energy dominance, using subsidies and strategic policies to control the market. U.S. solar manufacturers strive to compete for the world's cheapest energy source but require strong policy support to ensure long-term competitiveness against China's market manipulation. The 45X AMPTC is crucial to leveling the playing field and fostering a cutting-edge U.S. solar manufacturing sector. 

The 45X AMPTC encourages solar manufacturers to build or expand facilities in the U.S., reducing reliance on international sources. By offering tax credits to businesses that ramp up domestic production of solar panels, inverters, and other components, the policy makes it more financially viable for manufacturers to keep production local. This creates a more stable and secure supply chain, enabling the deployment of solar power systems faster and more reliably across the country. Critically, this provides a commercialization pathway for the cutting-edge research happening in the U.S. - ensuring U.S. workers can reap the benefits of the next big advances in solar technology, such as tandem modules that capture a wider spectrum of light and can lead to even more dramatic cost savings.

Several Members of Congress including Rep. Rich McCormick (R-GA-6), Rep. Mariannette Miller-Meeks (R-IA-1), Rep. Buddy Carter (R-GA-1), and many others have publicly expressed their support for the 45X AMPTC, citing the fact that these credits have enabled companies to invest in their districts and created thousands of good-paying jobs. They emphasize that the 45X AMPTC is helping the U.S. build resilient supply chains and providing the industry with certainty, which is critical for long-term business planning and capital allocation.

‍MA 45X Principles

The SEMA Coalition advocates for the following to preserve and strengthen the 45X AMPTC:

1. Independence from China. The 45X AMPTC has been particularly helpful in incentivizing U.S. solar manufacturers to significantly expand domestic production and build at a globally competitive scale. Currently, there are no restrictions on who can access the 45X AMPTC so long as they are producing in the U.S. It is critical to ensure that foreign entities of concern (FEOCs) are not able to simultaneously benefit from subsidized supply chains and get taxpayer dollars for taking the final steps in the U.S. If this tax credit is easily accessible to foreign adversaries or FEOCs, it will further undermine U.S. manufacturers. American taxpayer dollars should not be available to FEOCs that are already heavily subsidized or use forced labor in their supply chains.
2. Longevity and transferability. Congress must preserve the duration of the credit and the ability to monetize it through transfer to other taxpayers and direct payment to ensure financing continues for current and new solar manufacturing projects. Companies investing billions in new U.S. factories are unlikely to have tax liability for some time. Forcing them to create tax equity arrangements with big banks only undermines their ability to invest in this fiercely competitive space. If this monetization mechanism is not preserved or is phased out, project financing will become significantly tougher and could lead to major job losses.
3. Ensure that 45X AMPTC benefits next-generation technologies. It is crucial to advance investments in innovative solar technologies like tandem and direct wafering, which represent the promise of the U.S. fully regaining its leadership in solar manufacturing. The 45X AMPTC must remain technology-neutral so it can support the production of new technologies, not just legacy ones.

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The 45X AMPTC is critical to helping level the playing field for the American solar manufacturing industry, driving innovation, supporting domestic production, creating jobs, and ensuring energy independence. As the U.S. works to onshore manufacturing and ensure energy dominance, the 45X AMPTC plays a pivotal role in ensuring solar power continues to thrive. By making solar components more affordable and accessible, the tax credit reduces barriers to solar adoption, contributing to a cheaper, more reliable, and more resilient energy system. With continued support for policies like the 45X AMPTC, the solar industry will remain a critical part of the solution to the world’s energy challenges while creating job opportunities and investment in the U.S.