House Representative Michael M. Honda (D-CA) introduced the "Energy Storage for Grid Resilience and Modernization Act of 2016" (H.R. 5350) (the "Energy Storage Act"), which would, among other things, amend the Internal Revenue Code to provide energy investment credits for energy storage properties connected to the grid.
The Energy Storage Act would define the term "qualified energy storage property" as property that is capable of (i) absorbing energy, (ii) storing such energy for a period of time and, thereafter, (iii) dispatching such energy for certain purposes. The Energy Storage Act would, among other actions, establish the conditions for allocation as a qualified energy storage company, which allocation would be conducted by the Secretary of the Treasury in consultation with the Secretary of Energy.
Commentary
The proposed bill would extend the 30% investment tax credit from renewable energy generation property to renewable energy storage property. The credit would last for 10 years, subject to an overall limit of $2 billion. The Secretary of the Treasury, in consultation with the Secretary of Energy, would allocate the credit to "projects representing a variety of technologies, applications, and project sizes." Selection criteria include the "greatest increase in reliability or the greatest economic benefit," "greatest improvement in integration of renewable resources into the grid," and "greatest increase in efficiency in operation of the grid." The creation of a government bureaucracy to pick winners and losers based on vague and potentially conflicting criteria is not especially promising. In addition, the relatively small amount of credit allocated would be unlikely to stimulate meaningful progress in energy storage.
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