Introduction

Senators have introduced a new bill for energy storage that extends the investment tax credit (ITC) for both grid-scale and residential energy storage systems.

The Energy Storage Tax Incentive and Deployment Act is a bipartisan bill co-sponsored by seven senators. Introduced in Congress in May 2016, the new bill is modelled on the existing ITC policy for solar energy in a bid to open up competitive storage markets.

For commercial applications of storage, under the new bill, all energy storage technologies ? including batteries, flywheels, pumped hydro, thermal energy and compressed air ? qualify for the ITC, but only where the system has a storage capacity of at least 5 kilowatt hours (kWh).

The previous rules limited the application of the ITC to energy storage technologies installed alongside wind or solar power systems; however, the new bill extends the ITC to all applications of energy storage, including consumer owned and on or off-grid storage.

For residential applications of storage, the new bill extends the ITC to battery storage only, and eligible systems must have a capacity of at least 3 kWh.

Matt Roberts, the executive director of the Energy Storage Association, said:

"Extending the ITC to energy storage is critical to accelerate transition to a flexible, efficient and resilient US electric grid. This legislation demonstrates there is bipartisan agreement that reducing tax burdens on innovators and opening new opportunities for utilities, businesses and households to invest in intelligent energy systems is an effective way to modernize our energy infrastructure and create a cleaner, more reliable electric grid."

Cross-senate support

The bill garnered support from both the Democratic and Republican sides of the Senate.

Senator Martin Heinrich added:

"This bipartisan bill will ensure federal policy supports the integration of emerging storage technologies into the our nation's energy grid. Grid-scale energy storage will bolster system resilience during emergencies and outages, provide reliable supplemental services to the grid, and displace new investment in expensive substations and transmission lines… As generation and storage technologies improve and become less expensive in the coming years, economics will drive new electrical generation consistently in the direction of clean, pollution-free power."

Senator Angus King concurred:

"This ITC will play an important role in encouraging storage innovation, supporting the growth of the industry, and helping businesses and consumers alike as they take their energy future into their own hands by investing in renewable power."

Last year, King and Heinrich introduced legislation to set national targets for energy storage. King has also introduced the Free Market Energy Act to establish parameters for the governance of distributed energy resources, including storage, solar and wind power.

For further information on this topic please contact Steven Towell at Norton Rose Fulbright by telephone (+1 202 662 0200) or email (steven.towell@nortonrosefulbright.com). The Norton Rose Fulbright website can be accessed at www.nortonrosefulbright.com.

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