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Legislation to Extend ITC to All Energy Storage Projects Gaining Traction

Legislation to extend the Incentive Tax Credit (ITC) to energy storage was re-introduced yesterday by Senators Martin Heinrich of New Mexico and Cory Gardner of Colorado, along with 10 cosponsors. Currently, the ITC only applies to renewable forms of energy production, but does not apply to any form of storage. As a result, when renewable energy is not being produced, utility companies are forced to rely on traditional forms of energy production to meet their customers’ energy needs. Energy storage allows the energy that is produced via a renewable source, such as solar and wind, to be stored and released later when production slows.

Legislation of this nature has been introduced before, but this bill is gaining momentum according to the Solar Energy Industries Association (SEIA). Earlier this week, Representative Mike Doyle of Pennsylvania introduced a companion bill to the House. In addition to these bills, more than 100 members of the House signed a letter addressed to the Chairman of the Ways and Means Committee, seeking to “encourage the Committee to consider allowing for the transferability of existing tax credits to other project partners” and to “clarify the tax code for energy storage technologies, which are critical for the continued deployment and expansion of intermittent, clean energy technologies, such as wind and solar, and help modernizing the electric grid to make it more efficient and resilient.”

The legislation is written to extend the ITC to all energy storage systems, regardless of the source of the generation. The bill will help incentivize investment in energy storage of all sizes, from commercial and utility-scale operations, to residential storage systems designed to support rooftop solar. This is the major distinction between this bill and prior legislation. Residential energy storage systems powered exclusively by on-site solar have been eligible for the ITC since 2018, however, due to regulatory uncertainty, and a lack of clear guidelines regarding grid interconnection, investors have been hesitant to invest. The current proposed legislation extends the ITC to all storage, regardless of energy origin. Experts laud this expansion for the security it will bring investors and its potential to increase investment in storage.

The ITC however, is subject to limitations. The bill is an extension of the present ITC, and thus is subject to the same “ramp-down” as the current program for solar.

ITC Year
30% 2019
26% 2020
22% 2021
10% 2022 and Beyond for Commercial and Utility-Scale Projects
© 2020 Foley & Lardner LLPNational Law Review, Volume IX, Number 103


About this Author

Jason W. Allen, Foley Lardner, Energy Industry Lawyer, Finance Attorney

Jason Allen is a partner and business lawyer with Foley & Lardner LLP, where he is a member and co-chair of the Energy Industry Team. He is a member of the Finance & Financial Institutions, Transactional & Securities, and Private Equity & Venture Capital Practices. Mr. Allen’s practice focuses in the areas of mergers and acquisitions, private equity, finance, and general corporate and commercial law, with a particular emphasis on transactions in the energy industry. 

Legal, Business, Jeffery Atkin, Foley Lardner, Environmental Attorney

Jeffery R. Atkin is a partner and business lawyer with Foley & Lardner LLP. His areas of practice cover a broad range of business and financial matters, including renewable energy, project finance, private placements, mergers and acquisitions, joint ventures, real estate development and equipment procurement and leasing. Mr. Atkin is chair of the Solar Energy Team, co-chair of the Energy Industry Team, and a member of the Latin America Practice.

Mr. Atkin’s experience in renewable energy and project finance includes representing developers, investors, lenders and landowners in the construction, development, acquisition and financing of renewable energy generation facilities, including wind, solar, hydro, geothermal and biomass facilities.

Justus Britt, Solar Energy Project Attorney, Foley Lardner Law Firm

Justus Britt is a business lawyer and special counsel with Foley & Lardner LLP. Mr. Britt focuses on the development and acquisition of solar energy projects. His project development experience includes advising clients on real estate, permitting, and construction matters, including negotiating supply, EPC, and O&M agreements. Mr. Britt’s acquisition experience includes leading due diligence efforts and assisting on stock and asset purchase agreements, as well as joint venture agreements. He is a member of the firm’s Energy Industry Team and the Transactional...