State-Level Incentives for Energy Storage
- Varied Program Structures and Rates: State programs have diverse designs, including rebates, performance payments, or combinations of both, making direct comparisons challenging. For example, Connecticut’s Energy Storage Solutions program offers a mix of upfront rebates and ongoing performance incentives with equity provisions such as multiplier incentives for low-income participants. California’s Self-Generation Incentive Program (SGIP) provides dollar-per-kilowatt rebates, with increased support for high fire-risk zones and low-income customers.
- Incentive Rates: State incentive rates vary widely. Residential and small commercial energy storage incentives in states range approximately from $350/kWh to $1,333/kWh, with an average around $805/kWh. These rates are often higher and more targeted than federal incentives to boost distributed, behind-the-meter (BTM) storage adoption.
- Effectiveness and Uptake: State incentives are critical especially while energy storage markets mature and battery prices decline. Studies show significant uptake in states with incentives, whereas uptake remains limited in states lacking such programs. Programs often include additional benefits like equity support and financing options to enhance participation.
Federal Incentives for Energy Storage
- Investment Tax Credit (ITC): The federal government primarily supports energy storage through the ITC, which provides a tax credit based on a percentage of the cost of energy storage systems, especially when paired with solar projects. This credit currently stands at 30% of qualifying costs and is gradually stepping down over time. The ITC supports larger-scale and solar-coupled storage rather than small-scale standalone residential systems.
- Broader but Less Targeted: Federal incentives are generally available nationwide and encourage broader adoption but lack the granularity and flexibility seen in state programs. They do not typically include performance-based payments or equity-focused provisions that some state programs offer.
Comparison Summary
| Feature | State-Level Incentives | Federal Incentives |
|---|---|---|
| Type of Incentives | Rebates, performance payments, equity bonuses | Tax credits (e.g., Investment Tax Credit) |
| Rate Range | $350/kWh to $1,333/kWh (average ~$805/kWh) | Typically 30% of system cost (ITC) |
| Focus | Distributed and behind-the-meter storage | Solar-paired and larger systems |
| Flexibility & Targeting | More targeted, equity considerations, financing | Broad, uniform, less nuanced |
| Impact on Market Uptake | Critical for early adoption and equity | Supports wider adoption, less direct impact on small-scale uptake |
| Regulatory & Market Support | Often combined with state utility programs, regulations, and marketing support | Supportive but less integrated at local level |
State-level incentives are highly variable but crucial for fostering local adoption of distributed energy storage, often providing higher per-kWh incentives and tailored benefits. Federal incentives like the ITC offer important cost reductions broadly but generally lack the programmatic flexibility and targeted support provided by states. Together, they form a layered incentive landscape that drives growth in energy storage deployment across the United States.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-state-level-incentives-compare-to-federal-incentives-for-energy-storage-3/
