July 17 (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.