From: The Honorable Michael M. Honda
Sent By:
Date: 2/5/2016

Ask the IRS to include Battery Energy Storage under the Investment Tax Credit
Supported by: Tesla Motors, Inc., Stem Inc., Green Charge Networks, Energy Storage Association, Silicon Valley Leadership Group, Imergy Power Systems
Cosigners: Pocan, Castor, Langevin, Tonko, Cartwright, Lofgren, Grijalva, Hastings
Closing: TODAY – COB February 5, 2016
Dear Colleague,
The IRS is currently working on new guidance to accompany Section 48 of the tax code, which provides a 30% tax credit for qualifying renewable energy systems on commercial properties, commonly known as the Investment Tax Credit (ITC).
Technology is the key to our energy future, and tax incentives such as the ITC have encouraged the adoption of renewable energy technologies. In just the last few years, advancements in solar and wind technologies, in combination with the ITC, have led to the rapid deployment of renewable energy technologies across the nation.
Right now, energy storage technologies are being developed across the country that can fundamentally improve the way we generate, deliver and consume energy. Energy storage is being deployed on every part of the electric grid, increasing its capacity, flexibility, and reliability. However, energy storage has not been receiving the same benefits from the ITC as other renewable energy technologies.
Please join me in asking Treasury Secretary Lew and IRS Commissioner Koskinen to issue guidance on Section 48 that includes battery energy storage technologies, which will help speed the deployment of new storage throughout the country.
To join this letter, please contact Laurie Chong in my office or 202-225-2631.
Michael M. Honda
Member of Congress

Dear Secretary Lew and Commissioner Koskinen,
We are writing to urge you to develop guidance on 26 USC §48, the commercial Investment Tax Credit (ITC), that recognizes the benefit of energy storage. Energy storage technologies — including when paired with renewable generation or used as standalone resources — can provide an array of benefits to businesses and utilities across the nation, and thus should be able to receive a standalone benefit from the ITC.
As you know, the ITC provides a corporate tax credit for the purchase of qualified alternative energy resources, including solar, wind, geothermal, microturbines, and fuel cells. However, the existing guidelines only allow for storage to be interpreted under a narrow definition as property that directly supports alternative energy sources. For example, Private Letter Rulings allow energy storage devices to receive the ITC if, and only if, the storage devices receive at least 75 percent of their energy directly from qualified alternative energy resources such as solar. Supporting other alternative energy resources is only one of many applications that energy storage can provide, and energy storage has great potential to broadly impact both the energy and transportation sectors.
Storage devices have the capability to store large amounts of electricity, are deployable at any location in the country, and can not only work in concert with any form of energy generation, but can be designed specifically to provide benefits to the grid. These systems can operate as standalone systems to provide large-scale grid systems support, or through aggregations of smaller “behind-the-meter” systems that are connected to the grid, resulting in a more efficient grid that is more resistant to disruptions. As Independent System Operators/Regional Transmission Organizations (ISOs/RTOs) begin to prepare for the new realities of the Clean Power Plan and the increased penetration of intermittent energy resources, the deployment of flexible technologies such as energy storage to enable these resources on the grid is of paramount importance to maintaining a reliable national electric grid. Deployment of these grid-connected energy storage systems could further facilitate renewables deployment, increase grid reliability and resiliency, and reduce the need for fossil fuel-fired ‘peaker’ stations and expanding transmission infrastructure.
We are encouraged that the Department of the Treasury and the Internal Revenue Service are taking action to update the current regulations under §48. As you develop this guidance, we urge you to include energy storage technologies as broadly as possible under current law.
Thank you for your attention to our request. We believe that including storage devices as property under §48 is an important step in securing our nation’s energy future. Providing guidance that is inclusive of energy storage will allow for the nationwide adoption of these technologies in new and broader applications while enabling consumers to take full advantage of the benefits provided by the ITC.
We look forward to working with you on this important matter.