(Reuters) - Two small solar manufacturers on Wednesday said they are joining forces to make panels that will enable their customers, U.S. solar project developers, to collect on a lucrative new federal subsidy for American-made clean energy equipment.

The agreement between Georgia-based solar cell producer Suniva and Canada's Heliene, which has panel-making operations in Minnesota, is being touted by the Biden administration as evidence that Inflation Reduction Act (IRA) subsidies are succeeding in building a domestic solar manufacturing industry to compete with China.

"Before this Administration, solar companies across the United States were struggling," Treasury Secretary Janet Yellen, who will visit Suniva's Norcross, Georgia, facility later on Wednesday, said in a statement provided to Reuters. She noted that 20% of U.S. solar manufacturing jobs were lost between 2016 and 2020.

Suniva itself is restarting an idled factory.

"Now, though there remain significant challenges, Inflation Reduction Act tax credits are helping change the game," Yellen added.

Under the three-year, $400 million deal, Suniva will supply cells to Heliene, which will assemble them into panels. The products will be able to supply about 2 gigawatts of solar projects, according to Suniva. That would be enough capacity to power about 350,000 homes.

Solar project builders that use panels containing American-made cells will be able to claim a 10% tax credit for using domestic content, according to Treasury Department rules unveiled nearly a year ago. That bonus credit, created in the 2022 IRA, has been regarded by developers as elusive because there is no current U.S. supply of silicon-based solar cells, the predominant industry technology.

Some solar manufacturers have lobbied for more stringent domestic content rules to counter a flood of Chinese-made products in the global market.

"This contract is a testament to the effectiveness of the Inflation Reduction Act and Treasury's May 2023 domestic content guidance," Suniva CEO Cristiano Amoruso said in a statement. "We are proud to fulfill our long-standing promise to bring back cell manufacturing to the United States at our Norcross facility."

The domestic content bonus credit is in addition to a 30% IRA tax credit for renewable energy facilities.