Government Incentives for Thermal Energy Storage
1. Federal Funding for Research and Development
- FY23 Solar-thermal Fuels and Thermal Energy Storage Program: The U.S. Department of Energy (DOE) has allocated $33 million for research and development in thermal energy storage, focusing on cost reduction and integration with concentrating solar-thermal technologies. This program supports projects that aim to advance thermal energy storage for industrial processes and electricity production.
- Project Examples:
- Brayton Energy received $5 million to develop a novel particle-based thermal energy storage system, simplifying the design and reducing operational power requirements.
- Durion is working on a low-cost pressurized water storage system for commercial and industrial applications, funded with $1.6 million.
2. Tax Credits
- Investment Tax Credits (ITC): Traditionally, energy storage projects qualified for ITCs only when co-located with solar projects. However, recent changes allow standalone energy storage projects to be eligible for tax incentives, promoting private sector investment.
- Residential and Commercial Benefits: The Inflation Reduction Act of 2022 provides a 30% tax credit for homeowners installing clean energy systems, such as battery storage, through 2032. However, specific thermal storage systems might not be explicitly included under residential credits but can benefit from the commercial ITC.
3. Enhancing Grid Reliability and Renewable Integration
- Incentives for energy storage systems help support grid reliability by providing backup during times of renewable energy intermittency, thus enhancing overall system resilience.
4. Monetization Strategies
- Tax credit transferability allows energy storage project developers to monetize their tax benefits more easily, attracting investment by simplifying the sale of credits.
Impact on Cost Reduction
- Direct Financial Support: Research and development funding directly supports the cost of developing new technologies.
- Tax Incentives: By providing tax credits, governments can offset a significant portion of the upfront costs associated with installing thermal energy storage systems, making them more financially viable for both residential and commercial users.
- Promoting Scale and Economy: Increased investment due to incentives can lead to economies of scale, further reducing costs over time.
In summary, government incentives are critical for lowering barriers to entry in the thermal energy storage sector, fostering innovation, and enabling widespread adoption by mitigating initial costs.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-role-do-government-incentives-play-in-reducing-the-cost-of-thermal-energy-storage-systems/
