SB Energy Global, a solar company backed by SoftBank Group and Ares Management, has recently obtained $1.9 billion in financing for its upcoming projects. What sets these projects apart is their qualification for federal tax credits tied to the purchase of components made in America. This marks a significant milestone in boosting domestic manufacturing and green energy, thanks to the tax incentives provided by President Joe Biden’s Inflation Reduction Act.
To meet the requirements for the tax credits, SB Energy Global has carefully established a domestic supply chain. They have sourced solar modules from a First Solar Inc. factory in Ohio, steel from Texas and Georgia, and sun-tracking devices from various states, including Pennsylvania. By avoiding the need for customs and shipping from Asia, the company can better manage its supply chain, sidestepping potential delays and cost overruns.
The growing preference for domestically made solar panels began even before the Inflation Reduction Act. Supply chain disruptions during the pandemic and concerns regarding solar components made overseas, due to tariffs implemented during the Trump era and allegations of forced labor in China, have prompted US companies to seek equipment made within the country. SB Energy’s projects exemplify the shape-shifting American solar supply chain.
To qualify for an additional 10% tax credit, projects must satisfy a “domestic content” requirement. Another 10% tax credit is available for projects situated in “energy communities,” which encompass regions with fossil fuel activities, high unemployment rates, or decommissioned coal mines or coal-fired plants. These tax credits are calculated based on project costs.
SB Energy Global received support from JPMorgan Chase, Bank of America, Morgan Stanley, and Truist Bank for its Texas solar projects. All of these projects meet the requirements for the energy community tax credits, while three also qualify for the domestic content credit. Google, through its parent company Alphabet Inc., has agreed to purchase approximately 75% of the generated energy to power their data centers in Texas.
Q: What is the significance of SB Energy Global securing financing for American-made projects?
A: SB Energy Global’s funding represents a milestone in qualifying for federal tax credits tied to purchasing components made in America, boosting domestic manufacturing and green energy.
Q: What are the criteria for the additional tax credits?
A: projects must satisfy a “domestic content” requirement and can receive an additional tax credit by locating in designated “energy communities.”
Q: Who supported SB Energy Global’s Texas solar projects?
A: JPMorgan Chase, Bank of America, Morgan Stanley, and Truist Bank provided backing, including tax-equity funding.
Q: How much power will the Texas solar projects produce, and who will be the major buyer?
A: The projects are expected to generate 1.3 gigawatts of power, with Alphabet Inc.’s Google purchasing about 75% of the energy to power its Texas data centers.