Overview of US Inflation Reduction Act (IRA) domestic content requirements and their implications for Canadian clean energy equipment manufacturers and project supply chains.
IRA Domestic Content Bonus
The IRA provides an additional 10% bonus credit (on top of the base ITC or PTC rate) for projects that use domestically manufactured steel, iron, and manufactured products. The domestic content threshold increases over time, starting at 40% for projects placed in service before 2025 and rising to 55% for later projects.
Implications for Canadian Manufacturers
Under the Canada-US-Mexico Agreement (CUSMA/USMCA), Canadian-manufactured clean energy equipment may qualify as domestic content for IRA purposes, depending on the specific component and content rules. Canadian solar panel, wind turbine, and battery manufacturers should assess IRA domestic content eligibility as a competitive factor for US project sales.
Canadian ITC Domestic Content
Canada's Clean Economy ITC framework does not currently include a domestic content requirement equivalent to the IRA. Canadian project developers do not need to source Canadian-manufactured equipment to qualify for ITCs — eligibility is based on technology type and use, not origin.