There are specific restrictions and requirements for energy storage systems to qualify for tax credits:
- Capacity Requirement: For residential applications, battery storage systems must have a capacity of at least 3 kilowatt-hours (kWh) to qualify for the tax credit.
- Location and Use: The system must be installed in connection with a dwelling unit that is used as a residence by the taxpayer and located in the United States. Rentals do not qualify.
- Types of Systems: While the tax credit primarily focuses on electrical energy storage like rechargeable batteries, thermal and hydrogen energy storage systems also qualify under broader definitions.
- Installation Timeframe: The 30% tax credit for residential energy storage applies to systems placed in service after December 31, 2021, and before January 1, 2033.
- Standalone Systems: Standalone energy storage systems with a minimum capacity of 5 kWh qualify under the Investment Tax Credit (ITC) added by the Inflation Reduction Act (IRA).
- Solar-Attached Systems: Energy storage installed in connection with solar can also qualify for credits, but standalone energy storage does not qualify for the additional credits available for low-income community projects.
For commercial or industrial applications, additional restrictions such as domestic content requirements may apply for certain projects.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/are-there-any-restrictions-on-the-type-of-energy-storage-systems-that-qualify-for-the-tax-credit/
