Energy storage is a hot topic in the renewable energy industry. Battery energy storage systems (BESSs) are a sub-set of energy storage systems (ESSs). ESS is a general term for the ability of a system to store energy using thermal, electro-mechanical, or electro-chemical solutions whereas a BESS typically utilizes an electro-chemical solution.

The answer is yes! Storage energy systems are also eligible for the ITC if charged by the sun. If it is fully charged by the sun, you are eligible for the full 30% ITC. However, a stand-alone BESS is not currently eligible for the ITC. Although, the Energy Storage Tax Incentive and Deployment Act, introduced in 2019, intends to make those systems eligible for the same 30% tax credit.

ITC (Investment Tax Credit) and MACRS (Modified Accelerated Cost Recovery System) are two key tax incentives making the investment in renewables more attractive. When a system is owned by a tax giving entity, it is eligible for ITC but is not when it is a public entity. Only those battery systems that are charged more than 75% by a renewable energy system are eligible for the ITC. Currently it is 26% for both commercial and residential solar. However, below are some points one should keep in mind while looking for ITC:

  1. Geographical Location of Storage System¬†‚Äď Installation of a storage system on the transmission side of the meter may not qualify for the ITC as the storage property may not be considered ‚Äúgeneration property‚ÄĚ.¬†Solar¬†generation¬†property¬†includes equipment that uses¬†solar¬†energy to generate electricity i.e. where panels are installed.
  2. Charging¬†‚ÄďITC is not available to those systems where storage is charged more than 25% from the grid or from any source other than a solar facility.
  3. Timing of Installation¬†‚Äď A storage device installed one year after the original solar system qualifies for the ITC. However, it has not been confirmed by the IRS if storage can be added to older solar arrays and still receive the ITC. This may limit the feasibility of adding energy storage to older facilities.
  4. Ownership‚Äď The PV and energy storage would need to be in proximity and under common ownership (The same taxpayer)

Hence, to take advantage of the ITC when financing a storage project, BESSs must be incorporated into a solar facility.

California property tax exemption: Like the ITC, storage may qualify for a property tax exemption also if the BESS is part of a solar facility.

With reduced costs installation of renewable energy sources and battery energy, storage systems are not a big problem these days. If you need help lowering your energy use and exploring renewable and storage system options, contact Staten Solar, anytime.