Summary

Currently, the 30% solar investment tax credit (ITC) is limited to solar-paired battery systems. However, by extending it to energy storage systems, it fills a huge gap in benefits for solar power. Energy storage system act as complementary reserves to renewable resources like wind and solar power. They can provide backup power and lower costs for electricity during peak demand, when energy is the most expensive.

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Main Article

A bill to expand the solar investment tax credit (ITC) to encompass energy storage technologies for utilities, businesses, and homes was introduced this week in Congress.

“The Energy Storage Tax Incentive and Deployment Act would encourage the use of energy storage technologies and incorporating them into the national electric grid,” said Congressman Mike Doyle (D-PA) after introducing the bill. “Efficient, cost-effective energy storage is essential for transitioning to renewable energy and increasing electric grid resilience. There have been important advances in energy storage technology in recent years, and the field continues to produce rapid developments. This bill would promote greater investment and research in energy storage technologies, bolster the advanced energy economy, and create more clean energy jobs.”

The Energy Storage Tax Incentive and Deployment Act would move beyond current provisions that enable the ITC only for solar-paired battery systems.

HR 2096 simply tacks energy storage onto the existing ITC. This means that energy storage installations would be subject to the current drop-down schedule of the ITC. This tax credit allows you to deduct 30 percent of the cost of installation of solar panels and solar energy systems from your federal taxes. That credit slowly decreases to 10 percent in 2022 for businesses, while disappearing altogether for individuals solar powered homes.

Solar-paired energy storage systems are already eligible for the ITC; however this only applies if these systems are charged by PV systems, meaning that any system which also draws power from the grid might end up not being eligible for the credit at the end of the year. HR 2096 would remove any such provisions, and enable the ITC for energy storage whether these systems are charged by the grid, renewable energy, or both.

“It’s clear that combining clean, reliable solar energy with effective storage is the next frontier in securing a resilient and reliable electrical grid. Encompassing multiple technologies, energy storage systems save excess energy and convert it back to electricity when most needed. A storage ITC benefits not
The bill has been welcomed by the Solar Energy Industries Alliance (SEIA), with President and CEO Abigail Hopper calling it “critical”. solar, but also energy from a wide range of sources, helping to meet the nation’s current and new electricity demands,” Hopper noted.only

Energy storage systems often serve as complementary reserves to renewable resources like wind and solar power. They can provide backup power and lower costs for electricity during peak demand, when energy is the most expensive. This technology includes equipment which receives, stores, and delivers energy using, for example, batteries, compressed air, pumped hydropower, hydrogen storage (including hydrolysis), thermal energy storage, regenerative fuel cells, flywheels, capacitors, or superconducting magnets. Energy storage ultimately makes our electric grid more sustainable and resilient, and it can help provide power when a region needs it most – like the hottest summer afternoons and the coldest winter nights. Energy storage systems are also essential for supporting the deployment of advanced grid technologies and enhancing the operation of all types of generating resources.