STORAGE Act of 2012: What it Means for Energy Storage
The U.S. market for grid energy storage technology is expected to grow substantially over the next several years, especially as advanced solutions continue to demonstrate the ability to provide multiple valuable services for utilities and independent power producers.
But technology advancement is just one pillar of growth. As important are federal- and state-level policies that support the industry, helping technology suppliers, grid operators, and electricity customers benefit from the significant advantages of advanced energy storage solutions.
While lack of sufficient policy clarity has been cited as a key barrier to gain wide-spread storage deployment, recent activity shows promise. California’s Assembly Bill (AB) 2514, signed into law in 2010, is a fine example of a deliberative, merit-based effort to establish rules that will allow all technologies, including energy storage, to compete in an open electricity market.
With momentum building for additional polices, we’ll provide regular updates about the most important initiatives, including a breakdown of what they mean for advanced energy storage and their status.
For instance, on February 28, Congressmen Chris Gibson (R-NY) and Mike Thompson (D-CA) introduced H.R. 4096, the Storage Technology for Renewable and Green Energy (STORAGE) Act of 2012, which is a companion bill to S. 1845 introduced last November. If passed, the STORAGE Act would provide a 20 percent tax credit for grid-connected energy storage investment, so long as the resource has a power and energy capacity of at least 1MW/1MWh.
The maximum credit available to any single project is $40 million. The bill would also provide credits to onsite storage (30 percent tax credit for a system that is at least 4kW/20kWh, with a maximum credit of $1 million) and residential storage (also a 30 percent tax credit, but a minimum system size of 500kWh/2kWh, and the system must be located at taxpayer’s principal residence).
The STORAGE Act essentially provides a temporary tax cut for adopters of advanced storage technologies. Just as existing policies promote renewables or even petroleum products, the STORAGE act would promote a technology with proven success and significant potential.
In an industry renowned for risk aversion, the attention garnered by a temporary tax cut will help more utilities take that first step towards a new storage project. In the social hall of the electricity world, when seasoned utilities meet new-in-town storage companies, the STORAGE Act will serve as the ultimate icebreaker.
If the result is cleaner, more reliable and more economic electricity, then everyone wins.