Financial Incentives for Energy Storage

Energy storage adds backup capability to our RE systems, but it also adds cost. In addition to batteries, other costs are incurred, such as for power electronics (inverter/chargers and charge controllers), battery containers, cabling, disconnects, overcurrent protection, metering, shipping and taxes, and installation labor. A 30% federal tax credit can be claimed if the energy storage equipment is installed as part of a PV system. The catch is that the PV system (not the grid) must be charging the batteries to apply the full tax credit. You cannot just charge those batteries from the grid (say during a low rate period) and then discharge back onto the grid when rates are high if you want to claim the tax credit. Stipulations allow charging from the grid to account for up to 25% of the battery’s total capacity, but the tax credit will be reduced proportionately.

California’s investor-owned utilities—Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric—offer cash rebates via the Self Generation Incentive Program (SGIP) for energy storage. While rebates can approach $400 per kWh for the first 10 kWh of capacity, the exact amount depends on which utility and which program “step” they are at. Maryland offers state tax credits for energy storage—up to $5,000 for residential systems and up to $75,000 for commercial systems. And a few other states such as Nevada and Massachusetts are in the process of developing energy-storage incentive programs, as well.