Senator Martin Heinrich (D-NM) introduced the "Energy Storage Tax Incentive and Deployment Act of 2016" (S. 3159). The proposed bipartisan act would establish investment tax credits ("ITC") for the business and home use of energy storage.
The proposed legislation would amend the Internal Revenue Code of 1986 ("IRC") in order to:
- provide the same tax incentive that is available for solar energy currently in Section 48 of the Internal Revenue Code;
- require that systems have a storage capacity of at least 5 kilowatt-hours in order to qualify;
- extend the federal Investment Tax Credit ("ITC") for any energy storage project in all applications, including consumer-owner, grid-connected and off-grid applications;
- provide home owners with the same credit for solar energy that is available in Section 25D of the Internal Revenue Code; and
- specify that only battery storage is eligible for the residential ITC, and that the system must have a storage capacity of at least 3 kilowatt-hours.
The proposed amendments would apply to property placed in service, and expenditures paid or incurred, during taxable years occurring after December 31, 2015.
Commentary
This proposed change to the IRC addresses a hot-button issue in the clean energy world: energy storage. Because solar and wind energy are inherently intermittent, encouraging the storage of renewable energy production allows energy use to be shifted to the most efficient time. However, energy storage is still expensive, and extending significant tax credits for storage facilities would be most practical as part of a comprehensive energy policy.
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