Tax standards for energy storage projects

The base ITC rate for energy storage projects is 6% and the bonus rate is 30%. The bonus rate is available if the project is under 1MW of energy storage capacity or if it meets the new prevailing wage and apprenticeship requirements (discussed below). New Section 48E Applies ITC to Energy St
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State by State: A Roadmap Through the Current US

All of the states with a storage policy in place have a renewable portfolio standard or a nonbinding renewable energy goal. Fund to utilities to deploy four utility-scale energy storage projects with the intention of testing

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New Tax Credits for Energy Storage Industry. Critically, the act provides a federal investment tax credit (ITC) for a broad set of standalone energy storage facilities, including those employing battery, hydrogen, and

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6 FAQs about [Tax standards for energy storage projects]

What are the proposed energy storage regulations?

Energy Storage. The proposed regulations would retain the Code’s broad approach to defining new ITC-eligible energy storage property but would include a nonexclusive list of qualifying technologies.

What tax credits are available for energy projects in low-income communities?

In addition to the bonus for the Investment Tax Credit for projects in low-income communities, the Inflation Reduction Act: Provides a bonus credit of up to 10 percentage points for qualifying clean energy investments in energy communities.

Are energy storage projects eligible for a refundable ITC?

Energy storage projects owned by taxable entities are not eligible for a refundable ITC, but instead can take advantage of the new transferability rules. The IRA added a provision to permit project owners (other than tax-exempt entities) to make an election to transfer the ITC to an unrelated third party.

Do energy storage projects qualify for a bonus rate?

Energy storage projects (i) not in service prior to Jan. 1, 2022, and (ii) on which construction begins prior to Jan. 29, 2023 (60 days after the IRS issued Notice 2022-61), qualify for the bonus rate regardless of compliance with the prevailing wage and apprenticeship requirements.

Are energy storage projects exempt from prevailing wage and apprenticeship requirements?

Two exemptions from the prevailing wage and apprenticeship requirements exist: Smaller-scale energy storage projects (under 1MW of storage capacity) qualify for the 30% bonus rate regardless of compliance with the prevailing wage and apprenticeship requirements.

Is energy storage eligible for the IRA ITC?

Standalone energy storage is not eligible for this credit, but energy storage installed in connection with wind and solar projects may be eligible. In addition to all the changes for the ITC, the IRA also revised the Section 25D credit homeowners use for residential energy storage projects, such as batteries.

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