The Inflation Reduction Act of 2022 introduced significant changes to the tax credits for energy storage systems, effective from 2023:
- Residential Energy Storage Credit: Homeowners can now claim a 30% credit under Section 25D(a)(6) for standalone energy storage systems with a capacity of 3 kWh or greater, without the need for it to be installed concurrently with solar generation. This credit applies to property placed in service from January 1, 2023, to December 31, 2032, and will reduce to 26% in 2033 and 22% in 2034 before expiring.
- Business Energy Storage Credit: For commercial and industrial energy storage projects, the Investment Tax Credit (ITC) has been expanded. The base ITC rate is 6%, with a bonus rate of 30% available if the project meets prevailing wage and apprenticeship requirements. This includes standalone energy storage projects, which were previously only eligible if integrated with other renewable energy sources.
- Future Adjustments: Beginning in 2025, specific requirements like domestic content will impact the refundability of the ITC for tax-exempt entities. Additionally, a new Section 48E ITC will apply to energy storage technology placed in service after December 31, 2024, ensuring continued support for clean energy projects through at least 2033.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-changes-were-made-to-the-tax-credit-for-energy-storage-systems-in-2023/
