Catalyzing With Credit

Offering investment tax credit for energy storage systems could further propel battery markets.

De Ls Blog

The eligibility of solar technologies for federal Investment Tax Credit (ITC) has sparked extraordinary expansion in residential and commercial solar markets. In fact, since its approval in 2006, it has supported an astonishing 1,600% increase in annual solar installations. The Solar Energy Industries Association considers it “one of the most important federal policy mechanisms to support the deployment of solar energy in the United States.”  

Since 2016, the energy storage industry has lobbied extensively for batteries to be added to the list of technologies eligible for federal Investment Tax Credit. On April 4, Rep. Mike Doyle (D-PA) reintroduced the Energy Storage Tax Incentive and Deployment Act, a bill (H.R. 2096) that would offer energy storage the same 30% ITC offered to solar technologies.  

The updated bill and accompanying letter, signed by more than 100 House Democrats, would extend dollar-for-dollar tax credit eligibility to energy storage with the same descending rate structure in place for solar technologies: 30% through 2019, 26% in 2020, and 22% in 2021, and 10% for all commercial and utility projects developed thereafter.  

The letter to the Ways and Means committee requests that leaders "clarify the tax code for energy storage technologies, which are critical for the continued deployment and expansion of intermittent, clean energy technologies, such as wind and solar, and help modernizing the electric grid to make it more efficient and resilient." As SEIA President and CEO Abigail Ross Hopper stated, “It’s clear that combining clean, reliable solar energy with effective storage is the next frontier in securing a resilient and reliable electrical grid.”  

In recent years, some batteries have been granted tax credits when paired with eligible solar PV systems as part of the overall investment. But a number of requirements, such as charging exclusively with power from solar generation, have presented challenges. 

A recent report by Wood McKenzie forecasts that the energy storage market will expand significantly within the next five years to reach a total market value of $4.7 billion by 2024. Industry experts feel that making energy storage technologies eligible for the federal Investment Tax Credit would further incentivize investment in energy storage, increase deployments, and catalyze market growth. 

As SEIA President and CEO Abigail Ross Hopper stated, “It’s clear that combining clean, reliable solar energy with effective storage is the next frontier in securing a resilient and reliable electrical grid.”  

What are your thoughts? Do you feel that extending a federal Investment Tax Credit for energy storage technologies is the best way to move the industry forward?  

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