The IRS’ recent private letter ruling marks a milestone for the residential storage-plus-solar industry. The determination that an energy storage retrofit of a residential solar PV project is eligible for a 30% investment tax credit (ITC) under Section 25D is a step in the right direction toward a common-sense tax approach to storage.
According to the Energy Storage Association (ESA), reducing barriers for taxpayers is an important action this Administration can take to continue growing this industry and to create thousands of new jobs. However, an IRS private letter ruling does not constitute formal guidance. There is still significant uncertainty surrounding taxpayers’ ability to access the ITC — which could limit investment and hamper industry growth.
ESA says it will continue advocate for Federal legislation to further reduce bureaucratic barriers to availing the ITC for energy storage and eliminating constraints on development options for storage companies.
In a recent press release, the ESA writes: “In particular, we urge Congress to pass bipartisan, bicameral legislation (S. 1868 & H.R. 464) that clarifies eligibility of energy storage for both the Section 48 and 25D ITC, which would unlock storage to pair with all energy technologies — like gas power plants, wind turbines, and building HVAC systems – in addition to solar power.”