United States

United States

Calls for 'level playing field' in US energy storage

A number of wind power developers and industry associations have urged US political leaders to pass a bill making energy storage projects eligible to receive investment tax credits (ITCs).

The letter was sent ahead of discussions about extending energy tax legislation (pic: Architect of the Capitol)
The letter was sent ahead of discussions about extending energy tax legislation (pic: Architect of the Capitol)

More than 150 wind, solar, and hydro companies and organisations signed a letter supporting the Energy Storage Tax Incentive and Deployment Act.

The proposed bill would allow energy storage projects — including batteries, flywheels, pumped hydro, thermal storage, compressed air, and others — with capacities of at least 5kWh to apply for ITCs.

It would also make residential battery storage with a capacity of at least 3kWh eligible for tax credits.

Benefits

Wind power developers including EDP Renewables, Enel Green Power North America, and Pattern Energy were among those to sign the letter.

The Act would enable developers to obtain better financing, grow in scale to create jobs, and would create a level playing field for energy storage to compete with other energy resources eligible for the ITC, the signatories claimed.

Without clear statutory rules, investors and businesses face uncertainty when pairing energy storage technology with energy assets, which are eligible for ITCs, the letter stated.

Legislation

Currently, the law only allows energy storage to qualify for an ITC when paired with a solar project under certain circumstances, the American Wind Energy Association (AWEA), which also signed the letter, explained.

It was addressed to speaker of the outgoing house of representatives Paul Ryan, senate majority leader Mitch McConnell, and minority leaders Nancy Pelosi and Chuck Schumer, ahead of forthcoming discussions about extending energy tax legislation.

"We are asking Congress to reduce uncertainty for investors by creating a stand-alone energy ITC for which all storage technologies can qualify," AWEA CEO Tom Kiernan explained.

"A level playing field for the full range of technologies will ensure consumers benefit from competition and will boost job-creating investment in infrastructure projects, including new opportunities for wind farm development."

Phase out

In 2015, the ITC — as well as the US production tax credit (PTC) — for wind projects was extended for a further five years, with a gradual phase-out planned by 2020.

In 2018, the credit scheme was widened to include some technologies including biomass and geothermal energy facilities, but not to energy storage projects.

Wind power projects that started construction in 2015 and 2016 were eligible for 30% of the ITC but this amount has declined annually.

Projects will receive 24% of the ITC if construction started in 2017, 18% in 2018, and 12% in 2019.

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