For six consecutive years at a stretch, solar has been one of the top two sources of generating electricity in the U.S. During the first week of April this year, the democratic nation witnessed a new strategy to add energy storage system in the list of technologies eligible for the federal Investment Tax Credit (ITC). Introduced by Mike Doyle, its goal is to extend the same 30 percent ITC offered to solar PV systems to batteries and other electric storage systems in the commercial, residential and utility-scale energy storage sectors.
The federal solar tax credit, also known as the investment tax credit (ITC) is one of the best financial incentives for solar in the US, allowing consumer to deduct 30% from the entire cost of a solar energy system, from their federal taxes. According to the SEIA 2019 reports, 2018 has bounced back with a residential market growth of 7%, wherein the non residential solar installations saw an annual decline of 8%. The federal tax credit can also be applied to the cost of installing a battery (the energy storage cell) along with your solar panel system. This led all the solar-home owners to think of entailing energy storage with their installations. The residential consumers need to hurry up because this prerequisite will be dissolved starting 2020, excusing only the commercial installations. The credits value will see a downfall of least 10% from the year 2022 onwards.
For a residential emptor, the sole criteria is to own a solar energy system first. The real benefit is, even if the customer does not have enough tax liability to claim the entire credit in one year, he can extend the remaining credits to the future years, as long as the tax credit is in existence. On the other hand, for fetching tax credit benefits, your battery (the energy storage cell) must be charged by an on-site renewable source of energy like solar. Otherwise that battery would not eligible for the 30% solar tax credit.
The SEIA 2019 also reports suggests that, a commercial organisation is eligible for the tax credit benefit as long as their battery is charged by a renewable energy system more than 75% of the time. Actually, the amount of the federal tax credit for batteries depends on how frequently the battery is charged by a renewable energy system. Otherwise, the credit will be based on the portion of renewable energy it receives. For example, if a battery is charged by solar 50% of the time, then it is eligible for 50% of the 30% ITC – equivalent to a 15% credit.
For a more detailed understanding on tax credits, or if you have any questions relating to any solar issues, please reach out to us at info@iSolarWorld.com or +1 201.285.2024.