November 25, 2024

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Hanwha Q Cells' facility in the US state of Georgia (Hanwha Solutions)

South Korean battery and energy firms that have already built production sites in the United States are expected to receive tax credits from the US Inflation Reduction Act, Korea's Ministry of Trade, Industry and Energy said Friday.

The US Department of Treasury earlier unveiled proposed guidelines for manufacturers looking to receive consumer tax credits for making eco-friendly energy components such as batteries for electric vehicles and solar panels.

The incentive, named the Section 45X Advanced Manufacturing Production Credit of the IRA, aimed at boosting domestic manufacturing and encouraging more use of clean energy to reduce carbon emissions, is available for products sold after Dec. 31, 2022. The tax credits will be effective through 2032.

The Trade Ministry said the guidelines resolve uncertainties for companies that produce advanced manufacturing items in the US because they include details on the definitions of products and application circumstances. It added that Korean firms in the battery, solar panel and wind sectors will greatly benefit from the tax credits.

Section 45X consists of a $35 tax credit per one kilowatt-hour of a battery cell and a $10 tax credit per one kWh of a battery module. Korean battery makers -- LG Energy Solution, SK On and Samsung SDI -- are expected to be eligible for these tax credits as they either have been operating manufacturing plants in the US or are building production facilities there.

“The government has been negotiating with the US government to reflect the Korean companies’ opinions regarding the IRA,” said the Trade Ministry in a statement.

“The government will continue to strengthen the communication with the private sector and keep carrying out talks with the US to minimize pressure and maximize benefits for Korean companies.”

By Kan Hyeong-woo  (hwkan@heraldcorp.com)