There will soon be an energy storage tax credit proposal in both the House and Senate.
Sen. Martin Heinrich (D-NM) will introduce an investment tax credit for energy storage the week of July 11, based on the existing credit for solar energy. The legislation would give businesses and homes a 30 percent credit, but the credit would taper off starting in 2020. Rep. Mike Honda (D-CA) introduced similar legislation on the House side in May.
This isn't Heinrich's first foray into energy storage; last year he introduced a national mandate for storage, based on the California model. That approach didn't work out, but he told Greentech Media that he hopes the tax credit will be more attractive to lawmakers on both sides of the aisle.
“Given the parallels we’ve seen with adoption of solar technology, I think the tax credit approach has the potential to help storage grow quickly while attracting bipartisan support,” Heinrich said.
The bill would create incentives for both business and residential deployments. The business incentive applies to systems of at least 5 kilowatt-hours from any of the available technologies, including batteries, flywheels, pumped hydro, thermal energy and compressed air. The credit only applies to battery storage for residential applications, and the systems must have at least 3 kilowatt-hours of capacity. For comparison, the Tesla Powerwall has 6.4 kilowatt-hours of capacity.
The U.S. storage market is still a fraction of the size of the wind or solar industries; it totaled $111 million in 2013 but rose to $441 million last year, according to GTM Research. It's expected to grow to $2.9 billion by 2021. That growth could accelerate with greater government support, like the tax credits that have boosted solar deployments since 2006. It's possible to apply those to storage if it's paired with solar, but current laws don't recognize storage on its own.
Even though storage doesn't generate energy in the way solar and wind assets do, it can play a vital role in integrating variable renewables by holding onto surplus power for consumption later on, both at the household scale and at the grid level. The ability to store and discharge energy at will also helps utilities meet peak demand and react to short-term frequency regulation needs.
Heinrich suggested that the diversity of customers and uses that storage serves could be an asset in navigating the legislative process.
“It's something that really helps utilities, and at the same time there's a growing consumer demand, and you have a growing commercial and industrial piece,” he said. “It doesn't seem to have this partisan edge to it that previous clean energy technologies got labeled with over time.”
Encouraging U.S. storage deployments will also benefit American manufacturing, Heinrich added. Since lithium-ion and other types of batteries tend to be quite heavy and dense, it makes sense to build them close to market rather than shipping them around the world.
The senator said he'll try to get the Senate Committee on Energy and Natural Resources to consider the bill, but he'll be open to other vehicles for delivering it. For instance, it could move forward as an amendment to a larger package, like the FAA reauthorization bill that's working its way through Congress.
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