The Senate Finance Committee this week highlighted the important role of energy storage in achieving the transition to a zero-carbon power sector with the advancement of a $259.5 billion clean energy package that includes tax incentives for stand-alone storage and combined solar and storage projects.
The Clean Energy for America Act by Oregon Democrat Sen. Ron Wyden seeks to streamline the tax code to make clean energy tax credits more accessible and effective. The Wyden package differs from President Biden’s American Jobs Plan, which also included an investment tax credit for storage, in that it would replace the current patchwork of 40 clean energy credits with three categories of technology neutral incentives for zero-emission generation.
The Senate Finance Committee voted 14-14 on Wednesday to advance the package to the floor for consideration by the full Senate. Unlike the floor, Senate rules allow legislation at the committee level to move forward on a tie vote.
In addition to making the investment tax credit (ITC) and production tax credit (PTC) available to storage, the package would:
Provide developers of clean energy projects the option to claim credits upfront in the form of a direct payout, reducing the need to sell the credits on an exchange to raise capital;
Makes homeowners who install renewable energy generation, including rooftop solar or wind turbines, eligible for a 30 percent tax credit under the ITC;
Imposes a ban on clean energy equipment imports from China over its suspected use of forced labor; and,
Extends the $12,500 tax credit for consumers to purchase U.S.-made electric vehicles, while eliminating tax credits for fossil fuels.
That last point is likely to trip up the bill on the floor where even moderate Republicans have strong oil industry ties, but there’s a good chance that many of its provisions can be added to other packages by the end of the year – similar to the convoluted path the Senate took last year to pass a major energy package.
Federal recognition of the important role storage can play in achieving national decarbonization goals is encouraging for an industry that has struggled with on-again, off-again incentive programs.
Tax credits are an important policy tool for encouraging investment in innovative energy technologies that will make the Biden administration’s ambitious climate goals achievable. Efforts in Congress to ensure tax incentives are stable and predictable will maximize their effectiveness and ensure taxpayer resources are used wisely.
The rapid rise of affordable and flexible battery storage is opening new doors for investment in dispatchable energy resources (DERs) and hastening the transition zero-carbon power generation. A more stable and predictable tax system would certainly help boost clean energy deployment.
Batteries have come a long way over the past decade thanks to advances in technology that have increased capacity, efficiency, and dramatically reduced prices. The viability of storage is allowing DERs like solar and wind to become dominant forces in the generation of electricity both in front of and behind the meter – without compromising resiliency or reliability and creating exciting opportunities for local aggregation and demand-side load management.
The United States will account for roughly 50 percent of the global market in energy storage by the end of this year – that’s a threefold increase from last year thanks in no small part to the extension of the ITC. Residential installation of rooftop solar generation and storage continue to be the main drivers for new installations.
The Energy Storage Association predicts at least 100 gigawatts of new energy storage capacity will be needed to achieve President Biden’s plan to decarbonize the power sector by 2035.
Combined solar and storage continues to be one of the fastest growing segments of the clean energy market with deployment of front-of-the-meter and behind-the-meter storage expected to increase significantly in the next two quarters, according to recent IHS Markit analysis.
The Solar Energy Industries Association (SEIA) predicts that by 2025, nearly 25 percent of all consumer-owned solar systems will include storage. In recognition of the growing value of storage, SEIA last month launched the Storage Advocacy Network to advocate for strong storage public policies.