Most directly relevant to the downstream energy storage industry is the introduction of an investment tax credit (ITC) for standalone energy storage. That can lower the capital cost of equipment by about 30%, although under some prevailing conditions it will be more or less, depending on, for example, use of local unionised labour.
Domestic Content – IRS Notice 2023-38 (May 12, 2023) An energy storage project (among others) is eligible for an “adder” bonus credit (generally an additional 10% ITC) if it satisfies US Federal Transit Administration–based “Buy America Requirements” for domestic content.
Acknowledgement of battery storage’s role The tax relief initiative, focusing on battery storage systems, is pioneering. It recognises the indispensable role that battery storage plays in bolstering the clean energy sector and propels the UK towards achieving more sustainable energy solutions.
Just over a year ago, the passing of the Inflation Reduction Act brought in what has been considered the biggest legislative action on climate seen in the US. It brought with it investment tax credit (ITC) incentives for standalone energy storage, answering one of the industry’s biggest asks of policymakers.
Tax relief eligibility for battery storage Projects The expanded tax relief encompasses three main categories of battery storage projects, each contributing towards the enhancement of the UK's energy grid's resilience and sustainability: • Battery storage integrated with Solar PV: Enhancing solar energy generation with storage capabilities.
Monetization and Potential Impact and Opportunities The act provides for refundable green technology industry tax credits, including for the energy storage facility ITC and the energy storage equipment manufacturing facility ITC and PTC.