New IRA Domestic Content Guidance: First Updated Elective Safe Harbor and Revised Guidance
Yesterday, Treasury and the IRS released Notice-2025-08 modifying Notice 2024-41 and Notice 2023-38 . Notice 2025-08 provides material updates and clarifications to the New Elective Safe Harbor (introduced in Notice 2024-41, and covered by our prior Client Alert found here.)
The New Elective Safe Harbor in Notice 2024-41 issued last year was a welcome addition and simplification for stakeholders seeking a more accessible approach to satisfying the Domestic Content requirements. As stakeholders began to apply the New Elective Safe Harbor in a real-world setting, however, ambiguities emerged. It became clear that the New Elective Safe Harbor tables did not fully reflect the scope of configurations, design and application of potential technologies to projects otherwise eligible for the Domestic Content bonus. To address these concerns and add further detail, yesterday’s Notice 2025-08 modifies the prior Notices in five major ways by (1) expanding and modifying the Solar PV Table, (2) modifying the Land-Based Wind Table, (3) modifying the BESS Table, (4) clarifying potential use by a taxpayer of the First Updated Elective Safe Harbor where a project meets the 80/20 Rule; and (5) providing definitions for types of Applicable Projects, Applicable Project Components and Manufactured Project Components.
In this update, we focus on the changes to the key tables and new definitions provided in Notice 2025-08.
Updated Solar PV Tables.
Notice 2025-08 modified “Table 1” from Notice 2024-41 for Solar PV projects by (1) dividing the table into two distinct sets, the “Updated Table for Solar PV Ground-Mount” and the “Updated Table for Solar PV Rooftop”, (2) revising the Assigned Cost Percentages in each table, (3) adding new columns to each Solar PV table primarily to address PV modules that incorporate c-Si PV cells and wafers manufactured within the United States (as explained in the Notice, primarily because of the material cost associated with such cells and wafers), (4) renaming certain components for clarity (e.g. “Pile and ground screw” is renamed “Steel pile or steel ground screw”, and “Steel or iron rebar in foundation” is renamed to “Steel or iron reinforcing products in foundation”), and (5) redefining, recategorizing and reclassifying certain components in each Table. Below we’ve reproduced the two new Solar PV tables (without footnotes). Stakeholders should consider (and compare to the prior tables) the updated values when calculating whether a project can satisfy the Domestic Content requirements through this First Updated Elective Safe Harbor and revised guidance.
In addition to updated tables, Treasury and IRS clarified the meaning of APCs and MPCs listed in each table. For example, “Electrical Parts” means “the components consisting of only control transformers, capacitors, inductors, bus/cables, and circuit protection not on printed circuit board (PCB) assemblies”, “Enclosure” is now defined as “the protective structure that houses, that is, encloses, the other inverter components”, and “Skid” means “that component upon which the enclosure sits”.
An updated Land-Based Wind Table.
For Land-Based Wind projects, Notice 2025-08 modified Table 1 by (1) renaming “Steel or iron rebar in foundation” to “Steel or iron reinforcing products in foundation” to “better reflect the Applicable Project Component’s function and to clarify that non-rebar steel or iron reinforcement is also covered (note this change was made in the Solar PV tables, Land-Based Wind tables and BESS Tables for the same reasons); and (2) revised “Materials” to “Preform” so as to “better reflect the manufacturing process and supply chain”. Notice 2025-08 did not modify the Assigned Cost Percentage in the Land-Based Wind project table. Much like the Solar PV tables, Treasury and IRS clarified the meaning of APCs and MPCs listed in the table. For example, “Preform” is defined as “the rough-formed forged metal component from which a wind tower flange is rolled and machined”.
An updated BESS table.
For BESS Projects, Notice 2025-08 modified Table 1 by (1) revising the Assigned Cost Percentages in the table with Treasury and IRS noting that the updated figures “more closely reflect the direct cost methodology”, and (2) renaming certain components for clarity (e.g. “Battery Pack” to “Battery Pack/Module”, “Inverter” to “Inverter/Converter” and “Steel or iron rebar in foundation” to “Steel or iron reinforcing product in foundation”). Below we’ve reproduced the new BESS Table (without footnotes).
In addition to updated tables, Treasury and IRS clarified the meaning of APCs and MPCs listed in the updated BESS table. For example, “Battery Management System” means “a combined system of electrical and electronic parts that serves to monitor (and may also control) the condition of the battery pack/module”, “Thermal Management System for Inverter” means “the primary cooling unit to optimize operation and safety, external to and/or within the Inverter/Converter (in which it is a manufactured Product Component of the Inverter/Converter), and “Thermal Management System for Battery Container/Housing” means “the primary cooling unit to optimize operation and safety of the BESS (in which it is a Manufactured Product Component of the Battery Container/Housing)”.
Notice 2025-08 includes a detailed section regarding the interplay of Notice 2023-38, Notice 2024-41 and Notice 2025-08 for purposes of relying on the new First Updated Elective Safe Harbor. The detailed requirements include confirmations that the Steel or Iron Requirement (as modified) must still be met, no partial reliance on the First Updated Elective Safe Harbor is permitted, description of how to calculate the Assigned Cost Percentage when using Mixed Source Items, and a certification and substantiation requirement.
Finally, Notice 2025-08 provides a detailed reliance section that controls in the event of a conflict between this new Notice, Notice 2023-38 and Notice 2024-41.
Next Steps
While Notice 2025-08 may prove to be a welcome update to the existing safe harbor guidance, it remains to be seen how Domestic Content and Prevailing Wage and Apprenticeship requirements evolve during the incoming Administration. Most industry stakeholders believe the Domestic Content requirements align well with the Administration’s stated agenda of expanding domestic manufacturing and hope to see the Domestic Content requirements persist in some form. In the interim, Notice 2025-08 provides some helpful clarity that may prove valuable for stakeholders evaluating a Domestic Content-strategy; however, our view remains that until a domestic BESS cell supply chain matures, stakeholders will continue to find it difficult to source sufficient cells for many large BESS projects to qualify for the Domestic Content adder.
We will continue to monitor Treasury and IRS guidance for any new developments, and work with suppliers, EPCs, owners and investors as this new guidance and updated safe harbor is implemented in the market. If you have questions about this updated guidance please reach out to the Clean Energy Counsel team.
Questions? Please reach out to:
Gary Stapleton (771) 772-2766, Zach Crowley (831) 200-9158, or Jonah Brotman (303) 225-4792