Inflation Reduction Act 2022: What It Meant for Solar Installers and Equipment Buyers

On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) into law, delivering roughly $369 billion in energy and climate provisions — the largest such investment in U.S. history (UNCTAD). For solar installers, contractors, and facility managers, the IRA rewrote the tax-credit rulebook for the next decade. Below, we break down the provisions that matter most for equipment buyers and project developers.

The 30% Investment Tax Credit Is Back — and Stable

Before the IRA, the federal solar Investment Tax Credit (ITC) had already begun stepping down from its original 30% rate. The IRA restored the ITC to 30% for both commercial (Section 48) and residential (Section 25D) systems, with the step-down not beginning again until 2033, when it drops to 26% (SEIA IRA Summary).

Per the IRS, projects placed in service in 2022 qualify for the 30% rate under Section 25D, and larger commercial projects can access the same 30% rate under Section 48 by meeting prevailing wage and apprenticeship requirements, or by qualifying under the small-project exception (SEIA IRA FAQ). This single change gave installers a full decade of policy certainty to plan pipelines and inventory around — a marked shift from the uncertainty that had suppressed utility-scale demand in prior years.

A New Standalone Storage Tax Credit

Historically, the Section 48 ITC only applied to energy storage when it was paired with, and charged primarily by, an on-site solar system. The IRA changed that. Under the new law, standalone battery storage systems of at least 3 kWh now qualify for the same 30% ITC, independent of whether they're paired with solar (SEIA; McGuireWoods).

Note the effective date: the standalone storage credit applies only to expenditures made after December 31, 2022, so projects placed in service earlier in the year followed the prior rules (SEIA). This provision alone reshaped project economics for facility managers considering backup power and peak-shaving systems independent of a solar array — see our companion piece on the 2022 battery storage market for more detail.

Bonus Credits: Domestic Content, Energy Communities, and Low-Income Adders

Beyond the base 30% rate, the IRA introduced several bonus adders that commercial developers could stack on top of the base credit:

• Domestic content bonus — an additional 10 percentage points for projects meeting domestic manufacturing thresholds for steel, iron, and manufactured products.
• Energy community bonus — an additional 10 percentage points for projects sited in areas historically dependent on fossil fuel employment or affected by coal plant or mine closures.
• Low-income bonus — additional credit allocations (10-20 percentage points) for projects serving low-income communities or residential building programs, subject to an annual capacity allocation.

Combined, a qualifying project could stack credits well above the base 30% rate (Institute for Energy Research; SEIA Tax Policy). SEIA's tax guidance notes these new credits specifically "incentivize the development of solar and storage projects that pay prevailing wages and employ apprentices; use domestically-made steel and manufactured products; are located in geographic areas that previously relied on fossil fuel infrastructure and jobs; and that are located in or serve low-income areas" (SEIA).

Looking Ahead: The Technology-Neutral 48E Credit

The IRA also created a forward-looking, technology-neutral clean electricity investment credit under new Section 48E, designed to eventually replace Section 48 starting in 2025 for projects with net-zero greenhouse gas emissions. Under 48E, base credit and bonus structures largely mirror Section 48 (6% base, 30% with labor requirements met, plus the same domestic content and energy community adders), giving installers a consistent framework to plan around well beyond the 2022 tax year (Energy Toolbase IRA Summary).

Direct Pay and Transferability

For the first time, certain tax-exempt entities — municipalities, school districts, rural electric co-ops, and tribal governments — gained access to "direct pay," receiving the value of the credit as a cash payment rather than needing tax liability to offset. Taxable entities that don't qualify for direct pay gained a separate option to transfer, or sell, their credits to a third party for cash. Both mechanisms opened solar and storage financing to buyers who previously couldn't use the ITC at all (SEIA IRA FAQ).

What This Meant Day to Day for Contractors

• Commercial developers had new incentive to specify domestically manufactured racking, inverters, and modules to capture the content bonus.
• Facility managers evaluating standalone battery storage — without a paired solar array — gained a federal incentive that didn't exist before 2023 project timelines.
• Residential installers could quote the 30% credit with a full decade of certainty rather than a scheduled step-down, simplifying customer conversations about payback periods.
• Public-sector and cooperative buyers gained a viable path to project ownership using direct pay, rather than relying solely on third-party-owned/PPA structures.

As commercial and residential customers moved to lock in the restored 30% credit before year-end 2022, demand for compliant equipment — from UL-listed batteries to prevailing-wage-eligible racking systems — increased quickly. PES Supply's catalog of 50,000+ SKUs across 169 authorized brands helped installers source both standard and domestic-content-qualifying equipment as project specs shifted. Browse battery storage systems, inverters, and solar panels to review current brand availability. Most orders ship within 7-10 business days.

Bottom Line

The IRA didn't just extend an expiring tax credit — it rebuilt the incentive structure for solar and storage from the ground up, adding a decade of policy stability, a new storage credit, and stacking bonuses that reward domestic sourcing and equitable siting. For installers and equipment buyers, understanding these provisions became essential to accurately quoting project economics for the rest of 2022 and beyond.

Sources: SEIA IRA Summary, SEIA IRA FAQ, McGuireWoods, IRS and Treasury Department guidance on Sections 48, 48E, and 25D.