Main Differences Between Federal and State-Level Incentives for Energy Storage
Federal and state-level incentives for energy storage systems in the United States differ significantly in their structure, benefits, and eligibility criteria. Here are the main differences:
1. Type of Incentives
- Federal Incentives:
- Investment Tax Credit (ITC): The federal government offers a 30% tax credit for energy storage systems, applicable to homeowners and businesses. The Inflation Reduction Act expanded this credit to include standalone energy storage projects, with additional bonuses for domestic content or location in energy communities.
- Clean Electricity Investment Credit (CEIC): Replaces the IRA in 2025, offering up to a 50% credit for commercial projects under specific conditions.
- State Incentives:
- Rebates and Performance Payments: States like California, Connecticut, and New York offer rebates per kilowatt of energy stored. Some programs also include performance-based incentives for reducing grid stress during peak periods.
2. Eligibility Criteria
- Federal Incentives: Generally available for homeowners and businesses installing eligible energy storage systems, with specific requirements such as prevailing wages and apprenticeships for full credit.
- State Incentives: Targeted towards residents of specific regions within states (e.g., California’s SGIP focuses on high fire threat districts and low-income households) and businesses reducing grid stress.
3. Benefits Structure
- Federal Incentives: Provide a direct tax credit that reduces federal income tax liability for businesses and homeowners.
- State Incentives: Offer upfront cash rebates or ongoing performance-based payments, often promoting grid stability and resilience.
4. Program Variability
- Federal Incentives: Are more uniform across the country but depend on centrally defined criteria.
- State Incentives: Vary widely in structure and funding levels between states due to differing legislative priorities and budget allocations.
5. Program Goals
- Federal Incentives: Aim to promote clean energy adoption nationwide through tax incentives.
- State Incentives: Often tailored to meet specific regional energy goals or address unique challenges like power outages in high-risk areas.
Each level of incentive supports the growth of the energy storage sector but through different mechanisms and target groups.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-main-differences-between-federal-and-state-level-incentives-for-energy-storage/
