From comparing the price of domestic and international solar module options to considering domestic content bonus credit financial benefits and product availability concerns, many factors come into play when weighing the pros and cons of utilizing domestic content. How do you know when domestic content is the best financial choice for your project?
In part three of our Domestic Content 101 blog series, we’re highlighting different domestic content strategies to help you maximize the value of your solar development or procurement.
Understanding the lifetime value of domestic content module options
When considering U.S.-manufactured cells for your solar procurement or development, pricing is only one of many criteria to keep in mind. It’s crucial to ensure that your domestic or non-domestic selection meets your technical specs, contract terms, trade risk appetite, and project timelines. Beyond meeting these minimum requirements, how can you easily compare available options and feel confident you’ve found the optimal module from a financial perspective for your solar procurement or design?
In addition to rapidly providing access to all of this data and insights on available domestic content options by quarter, the Anza platform uses your unique project inputs to rapidly compute installation cost savings and production benefits for each module option. By comparing the total lifetime value of these options using our Effective $/Watt metric, you can feel confident that selecting domestic content is the right choice for your project. Let’s look at a recent example from an Anza customer uncertain about the actual financial benefit of using domestic content in a project acquisition.
Client experience: How to decide if a specced domestic content module was worth the price
Anza’s client needed to assess the cost impacts of using domestic modules to satisfy domestic content requirements in an M&A opportunity. With no direct relationships with domestic vendors, they had previously hired an IE to conduct domestic calculations. Even with this third-party support, they still wanted a better understanding of how much value a product satisfying the domestic content requirement would create compared to other products in the market.
Our collaborative approach involved securing direct access to domestically manufactured modules and leveraging another Anza customer’s surplus stock. We also integrated the domestic content bonus credit into our Effective $/Watt metric, enabling our client to factor in production and installation cost savings. This analysis revealed that the domestic content option was 1.5 cents/watt more valuable than the next best alternative.
The expertise, data, vendor relationships, and Effective $/Watt analytics available from Anza helped our client experience a more competitive shortlist process and gain a deeper understanding of the actual value of a domestic content module.
Mixing international and domestic content
Another common practice solar module buyers and developers utilize to maximize their project profits is using a flexible component mix of domestic and non-domestic products. Currently, projects can qualify for the domestic content bonus credit through a combination of non-domestic and domestic modules. With notable cost differences between Tier-1 non-domestic and domestic module options, the choice to mix the two module types and still hit the threshold for domestic content is very appealing.
In many cases, Anza customers can realize the 10% domestic content ITC boost through a combination of international and domestic modules. Instead of using 100% domestic modules and increasing the overall project CapEx, modules from the same OEM or multiple OEMs can be mixed, often with the same size formats for implementation efficiency.
Client Experience: How to minimize CapEx while meeting 45% domestic content requirement
Recently, an Anza customer approached us with a portfolio of 17 projects totaling 160 MW, without an existing domestic content strategy. With timing considerations to keep in mind as the required domestic content percentage increases to 45% in 2025, we advised them to explore mixing domestic content and international component options to meet IRS requirements.
Each of their projects required a different mix of domestically and internationally sourced modules to achieve the 45% domestic content threshold set by the IRS, as projects with varying racking types had different allowances for domestic content. By strategically using a combination of domestic and non-domestic modules, the client was able to reduce CapEx while still complying with IRS domestic content regulations.
With instant access to lifetime value rankings, real-time pricing, technical diligence, and contract terms on demand in the Anza platform, you can quickly evaluate more domestic content and international options and feel confident you’ve found the highest value module for your project design. Our expert team can also help you determine how to best combine domestic and non-domestic module options to maximize project profits while managing risk.
Ready to optimize your domestic content strategy?
Anza RE, LLC and its affiliates, officers, directors, and employees (collectively “Anza”) provides this content (the “Content”) for informational purposes only and does not guarantee the accuracy or completeness of this information, which is subject to change without notice. As the Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, accounting, financial, or other advice. Nothing herein shall constitute or be construed as an offering of financial instruments or as investment advice or recommendations by Anza of an investment or other strategy (e.g., whether or not to “buy”, “sell”, or “hold” an investment). The Content is provided as-is and without warranties of any kind. You bear all risks associated with the use of the Content and ANZA DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ALL WARRANTIES OF TITLE, NON-INFRINGEMENT, ACCURACY, COMPLETENESS, USEFULNESS, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR USE, AND WARRANTIES THAT MAY ARISE FROM COURSE OF DEALING/PERFORMANCE OR USAGE OF TRADE. YOUR EXCLUSIVE REMEDY FOR DISSATISFACTION WITH CONTENT IS TO STOP USING THE CONTENT. ANZA IS NOT LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES, UNDER ANY THEORY OF LIABILITY, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS, USE, DATA, OR LOSS OF OTHER INTANGIBLES. IN PARTICULAR, AND WITHOUT LIMITATION, ANZA WILL NOT BE LIABLE FOR DAMAGES OF ANY KIND RESULTING FROM YOUR USE OF OR INABILITY TO USE THE CONTENT.
