Senators Introduce Bill to Create Tax Credit for Energy Storage
WASHINGTON, DC – Today, U.S. Senator Jack Reed joined Senator Martin Heinrich (D-NM) and other colleagues in cosponsoring the Energy Storage Tax Incentive and Deployment Act, a bipartisan bill to establish investment tax credits (ITC) for business and home use of energy storage. Other cosponsors on the bill included Senators Dean Heller (R-NV), Brian Schatz (D-HI), Al Franken (D-MN) Jeff Merkley (D-OR), Angus King (I-ME), and Mazie K. Hirono (D-HI).
The proposed tax incentives are modeled on the current ITCs for solar energy and apply to either large, grid-connected energy storage systems or to smaller battery systems for residential power. Home battery storage, coupled with a small wind or roof-top solar system, could be used to store energy during the day for use later in the day or during overcast skies and to help consumers reduce their energy bills.
"It's critical that we do all we can to promote the use of renewable energy. I'm fully supportive of establishing investment tax credits for energy storage, which plays an important role in capturing the energy generated by clean, sustainable sources such as wind and solar," said Senator Reed. "Providing incentives for the creative and effective storage of energy will help prepare individual households, industry, utilities, and our nation's electric grid to navigate the future of clean power and energy efficiency."
"This bipartisan bill will ensure federal policy supports the integration of emerging storage technologies into our nation's energy grid. 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," said Senator Heinrich. "As generation and storage technologies improve and become less expensive in the coming years, economics will drive new electrical generation consistently in the direction of clean, pollution-free power. Thousands of workers in New Mexico already work in the renewable energy sector, and with our incredible potential for both solar and wind and innovative research and development at our national laboratories and universities, the state is poised to become a major producer and exporter of clean power."
"In a state with immense renewable energy potential, like Nevada, utilizing energy storage technologies are important to the affordability, efficiency, and reliability of our electrical grid," said Senator Heller. "The Energy Storage Tax Incentive and Deployment Act will not only attract investments to our state but will also allow for our constituents to see real savings in their monthly bills. I'd like to thank Senator Heinrich for his leadership on this bipartisan legislation."
Energy storage compliments intermittent renewable resources, such as wind and solar to increase full-time availability, provide backup power in case of emergencies, and help reduce the need for high-cost power during periods of peak demand--such as during the coldest mornings or hottest afternoons. And according to the U.S. Department of Energy, in the United States today there are about 25,000 megawatts of installed energy storage.
The Energy Storage Tax Incentive and Deployment Act has the backing of the Energy Storage Association, the National Electrical Contractors Association, and the National Electrical Manufacturers Association.
Highlights of the Energy Storage Tax Incentive and Deployment Act:
- Business Energy Investment Credit for Energy Storage - For commercial applications, the bill provides the same tax incentive as currently available for solar energy in section 48 of the IRS code. All energy storage technologies would qualify, including batteries, flywheels, pumped hydro, thermal energy, compressed air, etc. To qualify for the ITC, the system must have a storage capacity of at least 5 kilowatt-hours. The credit allowed is the same as currently available for solar energy, including the phase down. The IRS currently allows a limited ITC for energy storage when it is installed in conjunction with a solar or wind energy system. The bill would extend the ITC for any energy storage project in all applications, including consumer-owned, grid-connected, or off-grid.
- Residential Energy Property Tax Credit for Energy Storage - For residential applications, the bill provides homeowners the same credit as currently available for solar energy in section 25D. However, only battery storage is eligible for the residential ITC, and the system must have a storage capacity of at least 3 kilowatt-hours.
This week Senator Reed also introduced the Storage Technology for Operational Readiness and Generating Energy (STORAGE) Act to empower the U.S. Department of Energy (DOE) to streamline and coordinate research and development programs relating to energy storage.