Senate bill would let energy-storage projects get tax credits

Source: Christa Marshall, E&E reporter • Posted: Thursday, July 14, 2016

Sen. Martin Heinrich (D-N.M.) introduced legislation yesterday that would allow energy storage systems to get investment tax credits similar to those available for solar power.

The “Energy Storage Tax Incentive and Deployment Act,” S. 3159, covers both grid-connected systems and smaller battery systems for households and businesses.

The bill would let commercial storage systems receive the same tax incentive currently available for solar energy under Section 48 of the IRS code. That includes all types of storage technologies, including batteries and pumped hydropower, as long as their storage capacity is at least 5 kilowatt-hours. The language is similar to a House bill introduced in May from Rep. Mike Honda (D-Calif.) (Greenwire, May 27).

Under current tax rules, energy storage projects can receive incentives when installed with solar or wind. The new bill would expand the eligibility of storage applications beyond those limitations.

“Grid-scale energy storage will bolster system resilience during emergencies and outages, provide reliable supplemental services to the grid, and displace new investment in expensive substations and transmission lines,” Heinrich said in a statement. Last year, Heinrich introduced a separate bill that would have established an energy storage portfolio standard modeled after legislation in California.

Residential users of energy storage also could claim the same credit, but only for batteries and systems with a capacity of at least 3 kWh. That would include models such as Tesla’s Powerwall for energy storage in homes.

The energy storage market set records last year for deployment and is expected to double by decade’s end, according to many forecasts. However, the federal energy regulatory commission is considering “barriers” to energy storage, including confusing definitions in some regions of what qualifies as a storage system (Greenwire, April 19).

The Energy Storage Association, National Electrical Manufacturers Association and National Electrical Contractors Association are supporting the legislation.

The bill co-sponsors include one Republican, Sen. Dean Heller of Nevada. Other co-sponsors are Sens. Brian Schatz (D-Hawaii), Al Franken (D-Minn.), Jeff Merkley (D-Ore.), Jack Reed (D-R.I.), Mazie Hirono (D-Hawaii) and Angus King (I-Maine).