Energy Storage Would Get U.S. Tax Credits in Bipartisan Bill

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A vehicle charger stands in the lobby at the Tesla Motors Inc. Gigafactory in McCarran, Nevada, on April 25, 2016.

Photographer: David Paul Morris/Bloomberg
  • Proposed investment tax credit modeled on solar incentives
  • Bill co-sponsored by Democrat Heinrich and Republican Heller

Energy storage would gain access to the same tax incentives that helped make renewable energy the biggest new source of electricity in the U.S. last year under a bill introduced in the Senate.

Batteries like the lithium-ion ones in phones and electric vehicles would be eligible for the tax incentives when connected to the utility grid at homes and businesses under a bill introduced Tuesday by Democratic Senator Martin Heinrich from New Mexico. The bill has eight co-sponsors including Dean Heller, a Nevada Republican, according to a statement.

Other energy storage technologies such as pumped hydroelectric power, flywheels and compressed air would also have access to the tax credits, modeled after incentives for the solar industry, which reimburse as much as 30 percent of installation costs. The popular investment tax credit helped solar power become the second largest new source of energy last year after wind power. Tax credits for both technologies were extended in December.

“It’s critical that we do all we can to promote the use of renewable energy,” Senator Jack Reed, a Democrat from Rhode Island, said in the statement. Storage “plays an important role in capturing the energy generated by clean, sustainable sources.”

Tesla Gigafactory

Heller cited the presence of Tesla Motors Inc.’s battery gigafactory in his state as a reason for backing the bill in a brief hallway interview at the Capitol.

“That obviously could benefit from a tax credit like this so it would be good for the state of Nevada,” he said. “Energy storage of that nature serves everybody well.”

Energy storage complements intermittent sources of energy like wind farms and solar rooftops, and can provide backup power during emergencies and reduce the need for high-cost power during peak daytime hours, the senators said.

To qualify for the credits, homeowners would need to install batteries of at least 3 kilowatt-hours, and commercial storage projects would need to have capacity of 5 kilowatt-hours or more from batteries or other types of storage.

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