But there is a caveat: the battery storage system must only receive power from the solar array and not from the grid, in the case of grid-tied rooftop solar systems.The Internal Revenue Service (IRS) said in a so-called private letter ruling that a battery system that stores energy from an existing rooftop PV array is a “qualified solar electric property expenditure” and the owners may claim a tax credit even if they had already claimed the credit when installing the array. à‚
The ruling was issued “only to the taxpayer who requested it”, the IRS said, and “may not be used or cited as precedent”. à‚ However, analysts say it is suggestive of the way the IRS intends to interpret the law and thus will be useful for others. à‚
In a statement, the Energy Storage Association said the 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 percent investment tax credit (ITC) … is a step in the right direction toward a common-sense tax approach to storage,” the ESA said.
“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.”
The ESA said it will “continue advocating for Federal legislation to further reduce bureaucratic barriers to availing the ITC for energy storage and eliminating constraints on development options for storage companies.”
The trade group urged the US Congress to pass legislation clarifying energy storage’s eligibility for investment tax credits, “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.”