Proposed Legislation for Tax Credits
Under current federal law, tax credits are available for the generation of renewable energy, but not for its storage. Last year two bills were introduced to provide investment tax credits for ES facilities and equipment that temporarily store energy for delivery or use at a later time.
Introduced by Sen. Ron Wyden (D-Ore.) in May 2009, the Storage Technology of Renewable and Green Energy (STORAGE) Act of 2009 (S. 1091) seeks to allow energy tax credits ranging from 20% to 30% related to various types of ES properties. Last year, it was referred to the Senate Committee on Finance. Then on Dec. 3, Rep. Mike Thompson (D-Calif.) introduced a similar version of the STORAGE Act of 2009 (H.R. 4210) in the House of Representatives. In December, H.R. 4210 was referred to the House Committee on Ways and Means.
Given the current gridlock in Congress, it’s difficult to predict the fate of these two bills. One organization backing them is the Coalition to Advance Renewable Energy through Bulk Storage (CAREBS), which supports investment tax credits for ES technologies. State legislatures in California, Ohio, and Utah are also considering bills that promote incentives for ES technologies, according to CAREBS.
FERC Approves Incentives for One Technology
Even though no federal legislation for incentives has been passed, the Federal Energy Regulatory Commission (FERC) recently decided in favor of incentives for one particular type of ES technology. On Jan. 21, FERC approved rate incentives for battery storage devices that are proposed to help improve the operation and reliability of the California ISO grid. Western Grid Development LLC is proposing to build and operate three sodium sulfur batteries of 10 MW to 50 MW at specific sites along the California ISO grid. The company asserts that the batteries are similar to substation equipment such as large electricity capacitors that are used in many wholesale transmission system facilities. FERC determined that the devices will operate as wholesale transmission facilities and granted a number of incentives.
In its decision, FERC observed that electricity storage devices “do not readily fit into only one of the traditional asset functions of generation, transmission or distribution” because they “can resemble any of these functions or even load.”
In a similar vein, the Public Utility Commission of Texas in January proposed an amendment to the Texas Energy Efficiency Rule that, among other things, explicitly makes ES an energy efficiency measure that is eligible for incentives.
The Future Role of Energy Storage
Interest in the use of ES technologies is finally starting to take off. For example, in November the DOE awarded a total of $185 million to 16 utility-scale ES demonstration projects designed to evaluate the merits of everything from CAES to flywheels to electric vehicle batteries.
Our government needs to provide incentives that promote the commercial development of bulk ES technologies. When successfully applied, these new technologies will enable the integration of the increasing amounts of renewable, variable energy resources into the U.S. electric grid while also helping to maintain reliability.
—Angela Neville, JD, is POWER’s senior editor.
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