Heinrich, Heller Introduce Bipartisan Bill To Establish Investment Tax Credit For Energy Storage

Legislation cosponsored by Schatz, Franken, King, Hirono, Feinstein, Reed, and Bennet creates incentives for business and home use of energy storage

WASHINGTON, D.C. —  U.S. Senators Martin Heinrich (D-N.M.), a member of the Senate Energy and Natural Resources Committee, and Dean Heller (R-Nev.) introduced the bipartisan Energy Storage Tax Incentive and Deployment Act of 2017, co-sponsored by U.S. Senators Brian Schatz (D-Hawaii), Al Franken (D-Minn.), Angus King (I-Maine), Dianne Feinstein (D-Calif.), Jack Reed (D-R.I.), Mazie K. Hirono (D-Hawaii), and Michael Bennet (D-Colo.) to establish an investment tax credit (ITC) for business and home use of energy storage.  

“I continue to be incredibly excited by the potential for innovative energy storage technologies to improve the efficiency, reliability and resiliency of our electric delivery systems that power homes and businesses. Widespread use of energy storage could help integrate renewable energy sources into our grid, support more robust microgrids, and optimize the operation of all types of power generating sources,” said Senator Heinrich. “This bipartisan bill will make it easier and more affordable to utilize energy storage technologies that will strengthen the renewable energy sector and support the thousands of clean energy jobs in New Mexico.”  

"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."

Senator Heinrich advocated for the bill during an Energy and Natural Resources Committee hearing and discussed how the bill would help stimulate integration of energy storage into the nation’s grid. Currently, there are no direct tax incentives available for energy storage.  

Energy storage complements 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. According to a recent U.S. Department of Energy study, there are about 25,000 megawatts of installed energy storage in the United States. 

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. 

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, as shown in the table, below.  The IRS currently allows an ITC for energy storage when it is installed in conjunction with a solar 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.  As shown in the table, the ITC phases out over five years.

A copy of the bill is available here.