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It’s Time for the Energy Storage Investment Tax Credit


Reaching President Biden’s climate goal – 50 percent reduction from 2005 levels of greenhouse gas emissions in 2030 – will require an energy mix that reduces fossil fuels, and instead relies on utility and distributed renewable energy and energy storage. The storage sector has seen huge growth – in the last quarter of 2020 alone, more than 2,100 MWh of storage systems came online, marking a new record for the industry and surpassing the previous quarter by 182 percent. Continued deployment of energy storage, however, needs an investment tax credit (ITC) to meet the demand for its grid services and make development projects “pencil.” Fortunately, there seems to be more momentum now than ever to make that a reality.

The solar industry has had an ITC for years, which has driven the solar energy market and provided certainty for companies who want to make long-term investments in clean energy. Any solar project that begins construction in 2021 and 2022 will receive that 26 percent credit.

Right now, battery energy storage qualifies for an ITC only if the battery is charged by a resource eligible for the credit, like solar. Decoupling the requirement for the battery to be charged by solar would place stand-alone energy storage on an equal footing with other clean energy technologies. And it would offer developers much more system design and grid-support flexibility.

An energy storage ITC finally seems possible. If it comes to fruition, it will provide an investment signal and push capital into storage deployment. The Energy Storage Tax Incentive and Deployment Act (SB 627 and HB 1684) provides an ITC available for stand-alone storage systems. Representatives Mike Doyle (D-Pa.), Vern Buchanan (R-Fla.), and Earl Blumenauer (D-Ore.) introduced the Energy Storage Incentive and Deployment Act in the House of Representatives, making a bipartisan effort for the ITC for energy storage in utility, commercial, industrial, and residential sectors. Similarly, in the U.S. Senate, Martin Heinrich (D-N.M.) and Susan Collins (R-Maine) introduced companion legislation. House and Senate committees will be meeting in the coming weeks to take up any energy tax legislation and it is our hope that an energy storage ITC is part of that initiative.