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What are the tax standards for energy storage projects

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Energy storage installations that begin construction after Dec. 31, 2024, will be entitled to credits under the technology-neutral ITC under new Section 48E (discussed below).

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Storage projects that start construction before 2033 will remain eligible for both the ITC and PTC. Those beginning in 2025 can receive an ITC of up to 50% under 48E if domestic

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What are the tax standards for energy storage projects [PDF]

6 FAQs about [What are the tax standards for energy storage projects ]

What are the New IRA rules for energy storage?

Energy storage was one of the major beneficiaries of the IRA’s new rules on both the deployment and manufacturing sides. The IRA enacted the long-sought investment tax credit (ITC) under Section 48 and 48E of the Internal Revenue Code (the Code) for standalone energy storage facilities.

What is the ITC rate for energy storage projects?

Energy storage installations that begin construction after Dec. 31, 2024, will be entitled to credits under the technology-neutral ITC under new Section 48E (discussed below). The base ITC rate for energy storage projects is 6% and the bonus rate is 30%.

What are the final IRS regulations for energy projects?

These final IRS regulations follow the proposed guidance issued in November 2023 and clarify critical rules for energy property eligibility, project definitions, and bonus credit considerations. For energy developers, project owners, and investors, these updates provide both welcome flexibility and areas of continued complexity.

Do energy storage projects qualify for a new ITC?

Energy storage projects placed in service after Dec. 31, 2022, that satisfy a new domestic content requirement will be entitled to a 10% additional ITC (2% for base credit).

What regulatory guidance has the government released on energy storage?

Of particular importance to the energy storage industry, the government has released final regulatory guidance for the ITC (both Section 48 and 48E of the Code), prevailing wage and apprenticeship (PWA) requirements, and transferability and direct payment, as well as other guidance on the energy community and domestic content tax credit “adders.”

Is energy storage eligible for the IRA ITC?

Standalone energy storage is not eligible for this credit, but energy storage installed in connection with wind and solar projects may be eligible. In addition to all the changes for the ITC, the IRA also revised the Section 25D credit homeowners use for residential energy storage projects, such as batteries.