Include Batteries with Your PV to get a 30% ITC for Storage

With the increased interest in battery storage, as a companion to a PV installation, the IRS, in October put out a request for comments on ways to improve the battery storage 30% ITC.

The IRS will issue a final ruling at the end of 2016 on the specific conditions under which batteries are eligible for the 30% ITC

“A new ruling from the IRS will provide clarity needed to unlock the solar + storage industry,” Jigar Shah, former SunEdison CEO said this month. Shah recently Founded Generate Capital, financing $0-down renewable energy upgrades for commercial & industrial building owners.

Since 2008, solar systems have been eligible for a 30% Investment Tax Credit (ITC) cutting their upfront costs by a third.

In “a Christmas miracle” – the 30% solar ITC was extended till 2020 by congress at the end of last year. Originally, that had been going to expire at the end of 2016, and few held out hope of any extension; so for utility-scale solar, which can take two years to build, that had put a hold on new projects, even before December 2016.

A storage system connected to the PV is eligible for the same 30% ITC as well, under certain limitations, according to Renewable Energy World. For example, it must be charged at least 75% by the PV it is connected to, and receive no more than 25% from the grid.

Most battery-attached PV has been getting the 30% ITC, but there are limitations that are unclear

With a likely increase in the adoption of storage – especially if there are more NEM reversals – and many questions from the solar industry about when it applies and what the limits are, the IRS needs to get the rule straight. It will issue a final ruling at the end of 2016, after reviewing the comments from the solar industry.

According to Deutsche Bank; 4.5GWh  – and $900 million per year – of stationary storage will be required by 2020 to integrate renewables into the grid. So batteries are in a solar future.

For now, only very early adopters are adding batteries to their PV, but the adoption of storage as well is likely to increase. According to SunPower CEO, Tom Werner:

“The attach rate [of batteries to solar projects] is still in the low single digit percentages. But I think that it will go up with a meaningful growth rate at 20% to 40% a year. I think it becomes a meaningful part of our business within five years.

“The question is do people buy a solar system and add storage and energy management to it? Or do they say, ‘Hey I want this complete solution and it’s great that SunPower can sell it to me?’ We’ll see.”

Another estimate – from GTM, is that ten percent of commercial solar customers will pair their installations with storage by 2018:

“As battery prices fall, the solar-plus-storage market could surpass $1 billion by 2018, according to the same report. The report further predicts the United States will install 318 cumulative MW of behind-the-meter solar-plus-storage capacity through 2018.”

On the news of the 30% ITC extension for solar, stock soared – will the same will happen with storage?

SolarCity, America’s biggest rooftop installer, surged 34 per cent, SunRun 33%, SunEdison, the largest renewable-energy developer, was up 25%, while SunPower went up 14%.

Image credit: via FlickR under CC license