The phase-out of tax credits for the energy storage market is expected to have several impacts:
Impact on Growth
- Short-term Slowdown: The removal of tax credits could reduce the base case for energy storage by 20% over the next five years, potentially slowing growth in 2025 and 2026. However, growth is projected to resume thereafter.
- State Incentives: In the absence of federal tax credits, states may implement their own incentives. This could lead to a more varied and localized approach to supporting clean energy and energy storage projects.
Project Development and Financing
- Fast-tracked Projects: Companies might fast-track projects to capitalize on existing credits before they expire, especially those with effective project modeling and efficiency strategies.
- Innovative Financing: The industry is expected to adapt by utilizing innovative financing methods, state programs, and revenue optimization strategies to maintain project viability.
Overall Energy Landscape
- Clean Energy Deployment: The repeal of tax credits for wind, solar, and battery storage could significantly reduce the amount of clean energy deployed. For example, it could lead to 237 GW less clean energy by some estimates.
- Market Resilience: Despite the challenges, the fundamental value of energy storage—such as balancing renewable generation and providing grid services—remains strong, suggesting the market will continue to evolve even without federal tax credits.
Overall, while the phase-out of tax credits presents challenges, the energy storage market is likely to adapt and continue growing, albeit with more emphasis on state-level initiatives and innovative financing strategies.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-will-the-phase-out-of-tax-credits-affect-the-energy-storage-market/
