A coalition of lobby groups from the breadth of the US clean energy industry is pressing Congress to make standalone energy storage project eligible for investment tax credits (ITC).
The credits, awarded at a rate of 30%, lit the fuse for US wind and solar power projects and could in theory grease the wheels of the nascent sector.
At the moment, there is ambiguity over the eligibility of storage equipment when paired with solar, wind or other compatible technologies. It does not qualify in its own right.
The letter gently reminds its targets that Energy Secretary Rick Perry described energy storage as “the holy grail”. Groups including the Energy Storage Association (ESA) and the Solar Energy Industries Association (SEIA) signed the letter to the leaders of both Houses. It states:
Energy storage systems are critical to modernization of the electric grid. The National Governors Association has underscored the multiple benefits of energy storage to save utilities, businesses, and households money while enhancing grid reliability and resilience. Energy storage systems are also fuel-neutral and help any generation resource connected to the grid – coal, gas, nuclear, wind, solar, hydro – become more efficient, productive, and competitive. The energy storage industry supports over 90,000 jobs today and has significant room to grow.
The legislation, Energy Storage Tax Incentive and Deployment Act (S. 1868 and H.R. 4649), has support across the aisle and covers energy storage technologies in all its current viable forms. That ever-growing list includes the familiar Lithium-ion batteries at the heart of Tesla’s Powerwall as well pumped hydro, flywheels, hydrogen and more.
The impact of the ITC on the solar industry is undoubted. A mooted removal of the ITC at the end of 2016 (it received a stay of execution) led Bloomberg New Energy Finance (BNEF) to forecast a drop of two-thirds from one year to the next. Now the solar industry wants to see its natural bedfellow given all the same advantages. Abigail Ross Hopper, president and CEO of SEIA said:
As our letter to Senate and House leadership details, energy storage systems are critically important to the modernization of America’s electric grid and represent a massive opportunity for clean energy, particularly solar power. In the energy world, you’d be hard-pressed to find an example of two technologies that complement each other as well as solar plus storage. Yet without clear rules of the road, companies continue to face financial uncertainty in their investments. Inclusion in the ITC is a crucial step if we’re going to harness storage’s full potential.
BNEF recently set its global forecast for energy storage investment at $620 billion by 2040. Mandated installation policies, as in California, can also drive the sector forward. The opening up of wholesale energy markets to energy storage systems, allowing them to sell their discharged power into, clears another hurdle. Access to the ITC would draw in early-stage investment. The importance of the issue can be measured by the money being spent lobbying for it. Companies from Tesla and Panasonic, to AI-powered energy storage firm Stem are investing big bucks to secure the clarity they, and investors desire.