Lawmakers propose energy storage system tax incentive

By Joe Bebon for PV Magazine

The bipartisan legislation would provide a federal investment tax credit for energy storage without the need for solar.

Federal lawmakers have introduced the Energy Storage Tax Incentive and Deployment Act. The bipartisan legislation would create a standalone investment tax credit (ITC) for energy storage technologies for utilities, businesses, and homes.

House Members Mike Doyle (D-PA), Vern Buchanan (R-FL), and Earl Blumenauer (D-OR) introduced the bill in the House, while Senators Martin Heinrich (D-NM) and Susan Collins (R-ME) introduced companion legislation in the Senate.

The current tax code only allows an ITC for energy storage when it is installed in conjunction with a solar energy system. The sponsors said the bill would extend the federal incentive for energy storage investments to a wider range of applications and provide greater assurance to prospective investors.

For commercial applications, the bill would make standalone energy storage eligible for the tax credit under Section 48 of the IRS code. All energy storage technologies would qualify, including batteries, pumped hydropower, thermal storage, and hydrogen storage. For residential applications, the bill would provide homeowners with the same credit for battery storage as currently available for solar power in Section 25D of the IRS code.

The U.S. Energy Storage Association (ESA) and Citizens for Responsible Energy Solutions (CRES) both support the legislation and urged Congress to pass it.

CRES Executive Director Heather Reams said the federal incentives would spur significant private-sector investments in energy storage.

Jason Burwen, the interim CEO of ESA, said the bill would put storage “on the same playing field as other clean energy technologies.”

According to ESA’s 2030 Vision, at least 100 GW of energy storage is needed to drive the U.S. clean energy transition and transform the electric system to handle 21st-century demands. The U.S. currently has over 3 GW of battery and other advanced energy storage deployed.

In February, members of the House Ways & Means Committee included similar ITC eligibility for standalone storage and an extension of the solar ITC in the Growing Renewable Energy and Efficiency Now (GREEN) Act. The Solar Energy Industries Association called that comprehensive bill “critical” for solar.

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