To qualify for the 30% Investment Tax Credit (ITC) for standalone energy storage systems (ESS), the following eligibility criteria must be met:
- Minimum Capacity: The energy storage system must have a minimum capacity of 5 kilowatt-hours (kWh). This applies to both co-located and standalone energy storage projects.
- Project Start and Completion Dates: The projects must be placed in service after December 31, 2022. Projects that begin construction prior to January 1, 2025, are eligible for the existing ITC under Section 48(a), while those starting construction after December 31, 2024, fall under the new technology-neutral ITC of Section 48E.
- Prevailing Wage and Apprenticeship Requirements: To receive the full 30% credit, projects must meet prevailing wage and apprenticeship requirements. The credit has a two-tier structure with a base rate and an increased rate.
- Domestic Content Requirement: For projects with capacities over 1 MW, there are domestic content requirements that must be met. However, an exception applies if the necessary components are not sufficiently available in the U.S. or would increase costs by more than 25%.
- Refundability: For tax-exempt entities, such as state and local governments, the ITC for energy storage is refundable. However, for taxable entities, it is not refundable but can be transferred.
- Location and Community Incentives: While standalone energy storage is not eligible for additional credits based on location in low-income communities, projects that combine solar or wind with storage might be eligible for such incentives if they meet specific criteria.
Note that these criteria apply primarily to commercial-scale energy storage projects under the ITC. For residential purposes, homeowners can claim a 30% Residential Clean Energy Credit under Section 25D for battery storage systems with a capacity of at least 3 kWh, without the need for prevailing wages or domestic content requirements.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-eligibility-criteria-for-the-30-itc-for-standalone-energy-storage-systems/
