What is the Energy Storage Investment Tax Credit?

Investing in energy storage systems can be an excellent way to reduce your energy bills and your carbon footprint. What many people don’t know is that investing in energy storage can also result in significant tax savings.

Here is everything you need to know about the tax credit you can receive for investing in energy storage.

What is the Tax Credit for Investing in Energy Storage?

The tax credit for investing in energy storage is part of the Business Energy Investment Tax Credit (ITC), a federal tax credit designed to incentivize businesses to invest in renewable energy and energy efficiency technologies.

The ITC can provide businesses with a credit of up to 30% of the cost of eligible energy projects, including energy storage systems.

What Types of Energy Storage Systems are Eligible for the Tax Credit?

To be eligible for the tax credit, energy storage systems must meet certain requirements. These requirements include:

• The system must be charged by an eligible renewable energy source, such as solar or wind power.
• The system must be capable of storing at least 20 kilowatt-hours (kWh) of electricity.
• The system must be able to discharge at a minimum rate of 5 kW.
• The system must be new and not previously used.

What are the Benefits of the Tax Credit?

The tax credit for investing in energy storage can provide significant benefits for businesses. These benefits include;

Lower Energy Costs: Energy storage systems can help businesses reduce their energy bills by storing excess energy during off-peak hours and using it during peak demand times.

Increased Energy Security: Energy storage systems can provide businesses with backup power in the event of a power outage, increasing their energy security.

Reduced Carbon Footprint: By investing in renewable energy and energy storage, businesses can reduce their carbon footprint and contribute to a more sustainable future.

How to Claim the Tax Credit

To claim the tax credit for investing in energy storage, businesses must file IRS Form 3468 with their tax return. The form requires businesses to provide information about the energy storage system and the total cost of the project.

It’s important to note that the tax credit is only available to businesses that own the energy storage system. Leased systems are not eligible for the tax credit.

Final Thoughts

Investing in energy storage systems can provide significant benefits for businesses, including lower energy costs, increased energy security, and a reduced carbon footprint. The tax credit for investing in energy storage can provide additional savings and incentivize businesses to invest in renewable energy and energy efficiency technologies.

To be eligible for the tax credit, energy storage systems must meet certain requirements, and businesses must file IRS Form 3468 to claim the credit. If you’re considering investing in energy storage, be sure to consult with a tax professional to maximize your savings.