(Reuters) - A group of U.S. solar manufacturers is calling on the Biden administration to toughen rules governing a tax credit for solar project developers that use domestically produced components, saying they can get the credit without using American solar panels.

WHY IT'S IMPORTANT

The Biden administration has sought to expand investment in clean energy, and the 2022 Inflation Reduction Act provided tax credits as an incentive to reduce reliance on Chinese-made goods.

Solar manufacturers are counting on a 10% tax credit to developers when their projects use American-made equipment to drive demand for solar panels, cells and the raw materials used to make them.

The administration has also been pressured to maintain supplies of imports that project developers say are critical to meeting the industry's robust current demand.

CONTEXT

To qualify for the domestic content subsidy, the IRA specifies that 40% of the cost of a project's manufactured products, such as modules, trackers and inverters, must be made in the United States.

But, the Solar Energy Manufacturers for America Coalition said a project can get to that 40% threshold by using U.S.-made steel racking to mount the panels and an inverter to regulate the power generated by the sun - even if the panels are made overseas.

SEMA argues that such a scenario undermines the administration's goals of building a robust solar supply chain to compete with China because solar panels are more difficult and expensive to manufacture than the other components.