Congress urged to make stand-alone energy storage systems eligible for a federal ITC

Written By: Jen Neville
December 21, 2018

investment tax credit solar

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Broad coalition of over 150 companies and energy groups ask Congress for a stand-alone storage ITC. Making stand-alone energy storage systems eligible for a federal Investment Tax Credit (ITC) would create jobs and help modernize the U.S. electricity grid, according to the companies and industry groups representing storage, wind, solar, hydro, manufacturing and other sectors.

These businesses issued a letter to Congressional leadership in support of The Energy Storage Tax Incentive and Deployment Act (S. 1868 & H.R. 4649), which would ensure a level playing field for energy storage to compete with all other energy resources currently eligible for the ITC.

The American Wind Energy Association (AWEA) signed onto the letter and issued the following statement in support:
“Energy storage technology will play an important role as we build an even more affordable and reliable electricity grid for the 21st Century,” stated Tom Kiernan, CEO of AWEA. “We're asking Congress to reduce uncertainty for investors by creating a stand-alone energy storage ITC for which all storage technologies can qualify. A level playing field for the full range of storage technologies will ensure consumers benefit from competition and will boost job-creating investment in infrastructure projects, including new opportunities for wind farm development.”

As you consider energy tax extenders legislation, we urge you to fix the investment tax credit in Section 48 and 25 of the tax code regarding energy storage as an eligible technology. There is bipartisan, bicameral support for this common-sense bill, the Energy Storage Tax Incentive and Deployment Act (S. 1868 & H.R. 4649)

Energy storage systems are critical to modernization of the electric grid and help any generation resource connected to the grid – coal, gas, nuclear, wind, solar, hydro – become more efficient, productive, and competitive.

The companies employ some of the over 90,000 people in the U.S. energy storage industry and have significant room to grow. Without clear statutory rules, they face continuing uncertainty from IRS guidance about the eligibility of energy storage equipment for Section 48 & 25D tax credits when paired with ITC-eligible resources. Additionally, energy storage equipment provides the same services whether it is integrated with ITC eligible technologies, like solar power, or whether it is paired with other energy resources like natural gas generation, wind power, nuclear plants, hydropower, building systems, or electric grid infrastructure.

If enacted, this language would allow the companies to better obtain financing, scale, create jobs, and become more competitive internationally in the fast-growing global storage market. Clarification of the existing ITC for energy storage, as proposed by S. 1868 and H.R. 4649, would provide greater certainty to investors and businesses. Moreover, all storage technologies—batteries, pumped hydro, compressed air, thermal storage, hydrogen storage, and others—would be eligible for the ITC, ensuring technology neutrality so companies can choose the optimal solution to meet their needs.

More significantly, with the ITC extended earlier this Congress to many other competitor energy technologies, allowing energy storage access to the same ITC is critical to ensure a level playing field across all energy technologies. Secretary of Energy Rick Perry called energy storage the “holy grail” for its transformative impact on the electric system, and exclusion of storage from energy tax credits is a significant oversight that will bias competition among solutions for power system efficiency.

Energy storage technologies—including batteries, flywheels, pumped hydro, thermal storage, compressed air, and others—are a source of reliability services and flexibility when connected to the grid as an independent resource or when paired with any energy source. Current law only allows energy storage to qualify for an ITC when paired with a solar project under certain circumstances.

Storage is a foundational component of a more robust electric grid, helping to balance power supply and demand instantaneously by storing electricity from low-cost energy sources and releasing that power during periods of high demand. When emergencies strike, energy storage can provide invaluable storm resiliency and backup power.

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