INCENTIVES FOR ENERGY STORAGE SYSTEMS
The first requirement for your to be eligible for the Federal Investment Tax Credit (ITC) is that you own your PV system (rather than lease it). For a solar battery to be eligible for the ITC your use of it must meet a few requirements. Your battery itself isn't technically renewable energy, because it can also be charged by electricity from the grid. So, in order to receive the 30% ITC, your battery needs to be charged by renewable energy more than 75% of the time.
The precise amount of the federal tax credit you qualify for depends on how frequently the battery is charged by renewable energy. To claim the full value (30% of the cost of your battery), the battery needs to be charged 100 % of the time from renewable energy. If it is not, the credit is based on the percentage of time it is charged by renewable energy.
For example, a battery that is charged by solar 85% of the time is eligible for 85% of the 30 % ITC – That would equal a 25.5% credit (85% x 30% = 25.5%). If the battery costs $8,500 to install, it would be eligible for a $2,550 tax credit ($8,500 x 30% = $2,550). But since you only charge it from your PV system 85% of the time you would recieve a $2,168 tax credit ($8,500 x 25.5% = $2,168).
Are Batteries Eligible for MACRS Depreciation Deduction?
Chart from National Renewable Laboratory (NREL)
The Modified Accelerated Cost Recovery System (MACRS) depreciation deduction can be applied to energy storage systems such as Humless batteries depending on who owns the battery and how the battery is used. If the battery storage system is owned by a public entity, such as a public university or federal agency, it is not eligible for tax-based incentives. If owned by a tax-paying business, the system may be eligible for some or all of the Modified Accelerated Cost Recovery System (MACRS – for businesses).
Without a renewable energy system installed, battery systems for businesses are eligible for the 7-year MACRS depreciation schedule: an equivalent reduction in capital cost of about 25% (Assumes a 35% federal tax rate and 10% discount rate.). The same benefit applies to battery systems installed along with a commercial renewable energy system if the battery is charged by the renewable energy system less than 50% of the time (Energy storage at a PV property charged on an annual basis less than 50% by the PV property would not qualify for the 5-year MACRS because it would not meet the primary use standard.). If the battery system is charged by the renewable energy system more than 50% of the time on an annual basis, the battery should qualify for the 5-year MACRS schedule, equal to about a 27% reduction in capital costs.
Don't Wait Too Long - The ITC Is Expiring Soon!
Currently the ITC is available to homeowners at its full 30% value, but it won’t be around forever. This federal solar incentive will start to be phased out in 2020 and be subject to the following schedule:
- 2018 – 2019: The ITC = 30% for residential and commercial
- 2020: The ITC = 26% for residential and commercial
- 2021: The ITC = 22% for residential and commercial
- 2022 and beyond: The IT = 10% for commercial and 0% for residential
Can You Claim The ITC If You Add Battery Storage To An Existing Solar System?
The elibigility requirements above assume that you are installing a solar battery at the same time as your solar panels. However, the National Renewable Energy Laboratory (NREL) has stated that energy storage added to an existing solar panel system should be eligible for the same tax credit benefits as a new system, as long as you own your solar panels. (See NREL's fact sheet for more information, and remember to share it with your tax advisor.)
Please note: Humless are energy storage experts, not tax experts! Tax codes are complicated, so consult your tax advisor before deciding what is best for you.
Can You Claim The ITC If You Add Battery Storage To An Existing Solar System?
If you combine the Federal ITC and California's SGIP incentive you could cover nearly two-thirds the cost of your Humless system!
California's Self-Generation Incentive Program (SGIP) offers incentives to energy storage systems based on several factors, including the kilowatt-hour (kWh) capacity of the system. The incentive amount offered to new storage customers will decline over time as the market matures to ensure efficient use of these ratepayer-funded incentives. Each incentive level is known as a “step,” and a certain amount of money is reserved for each step. There will be five steps for energy storage systems.
The table below illustrates the planned incentive steps for residential energy storage systems 10 kilowatts (kW) in size or less. For systems above 10kW,
50 Cents / Watt Hour
45 Cents / Watt Hour
40 Cents / Watt Hour
35 Cents / Watt Hour
30 Cents / Watt Hour
The chart below describes wich step each of the different utilities are in currently (as of February 2018), and what the incentive amount per Watt Hour is.
Residential < 10 kW C Step / Rate
Large Storage (≥ 10 kW) Step/ Rate
Lg. Storage Claiming ITC Step/ Rate
How Much Of A Financial Incentive Could I Receive For My
Humless Energy Storage System?
It depends on the size of the Humless system you purchase and when you apply for the incentive. All Humless Home systems meet the storage discharge duration requirements to qualify for 100% of the incentive.
For example: Let's say you purchased the 6.5 kWh Home Power Standard for $8,495. If this is for your home and your utility is Southern California Edison (SCE) you would receive $0.40 per Watt hour. 1 Kilowatt Hour = 1,000 Watt Hours. So, to calculate your incentive the equation would look like this:
(6.5 kWh x 1,000 Wh) x $0.40 = $2,600 Incentive
For complete details in the SGIP requirements, how to apply, and real time updated info on what step your utility is currently in, go to Self Gen California's website.
The state of Maryland has become a leader in energy storage, thanks to a new piece of legislation that establishes a state tax credit for batteries. The Maryland solar battery rebate program offers an incentive to home owners and businesses that purchase batteries that can store energy.
The program is available to residential and commercial taxpayers who have installed a qualified energy storage system on their residential or commercial property in Maryland during Tax Year 2018 (January 1 - December 31, 2018). MEA will award tax credits on a first come, first served basis while funding is available. MEA is currently reserving $225,000 for residential applicants $525,000 for commercial applicants each year starting in 2018 through 2022.
It offers a credit against state taxes worth 30% of the installed cost of an energy storage system. The value of the credit is capped at $5,000 for a residential project and $75,000 for a commercial project.
In order to receive the full value of the credit, you need to have sufficient state tax liability. For example, if your Maryland solar battery rebate is worth $3,160, but you paid $2,500 in Maryland state taxes over the course of the year, you can only receive $2,500 as a credit. Unlike the federal ITC for solar, the remainder won’t “roll over” to future years.
Massachusetts new SMART program that went into effect in 2018 offers an adder for battery storage systems that are integrated with a solar PV system. Depending on how big the battery is compared to the solar panel system it’s paired with, this adder could be anywhere from an extra $0.0247 to $0.0763 per kWh of electricity.
The adder is dependent on two factors: how big the battery is compared to the solar panel system it’s paired with, and how much electricity the battery can provide at a given time.
For example, if you have a 10 kW solar panel system and install a 6.5 kWh Humless HOME Power Standard system with it, you’ll get an additional $0.0507 per kWh of electricity. If you install a 20 kWh Home Power Plus system, your incentive will increase to $0.0516.
For more detailed information on the SMART program and it's Energy Storage Guidelines click here.