Energy Storage Industry Pushes for Clarity on Tax Credit Eligibility

A coalition of groups led by the Energy Storage Association (ESA) is calling on lawmakers in the U.S. House and Senate to clarify that energy storage systems qualify for the Investment Tax Credit (ITC), an incentive they say could help clean energy companies obtain financing, compete internationally and grow.

Bipartisan legislation in both houses of Congress would “ensure a level playing field” for storage resources, according to ESA. The Energy Storage Tax Incentive and Deployment Act (H.R. 4649 / S. 1868) would apply to utility-scale battery projects as well as smaller residential systems.

Already this year, the Internal Revenue Service (IRS) issued a letter determining that new storage projects can access the credit when installed with new ITC-eligible technologies. In September, a pair of lawmakers asked for clarification on whether retrofitted storage systems can access the credit as well.

Clean energy technologies are looking to the lame duck Congressional session for support, with battery storage joining electric vehicles in lobbying lawmakers on the way out.

Clarifying that energy storage projects may utilize the ITC “would provide greater certainty to investors and businesses,” ESA and other groups said in a Nov. 26 letter to Congressional leaders. The two bills in Congress, they argue, “would allow a diversity of U.S. companies to better obtain financing, scale, create jobs, and become more competitive internationally in the fast-growing global storage market.”

ESA’s lobbying attempts are being joined by seven other groups, including the American Wind Energy Association, the Solar Energy Industries Association and Advanced Energy Economy.

Earlier this month, Tesla, GM, ChargePoint and other electric vehicle advocacy groups called for Congress to continue federal tax credits supporting emissions-free car sales. Proponents say there is support on both sides of the aisle, but they must also beat back legislation proposed by Senator John Barrasso, R-Wyo., that calls for eliminating the credit altogether.

For energy storage, ESA and other groups say a growing number of technologies want access to the ITC and therefore batteries need the assistance to ensure a level playing field. All storage technologies, including batteries, pumped hydro, compressed air and others, would be eligible for the ITC, “ensuring technology neutrality so companies can choose the optimal solution to meet their needs,” they said.

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