The energy storage industry cheered a March 2 ruling by the Internal Revenue Service that said a taxpayer can claim a renewable energy tax credit to offset the cost of a battery system that was paired with existing solar power equipment.
In a private letter ruling, the IRS said the battery system qualifies for the 30% investment tax credit, or ITC, because it uses only solar energy to generate electricity. A battery on its own is not identified as property that qualifies for the credit.
While private letter rulings cannot be cited as precedent, the IRS decision suggests the agency may be willing to allow other taxpayers to claim the ITC for solar-plus-storage projects that have characteristics mirroring those of this case.
"It's a big day for the residential solar+storage industry," Jason Burwen, vice president of policy at the Energy Storage Association, tweeted March 2. Burwen added that private letter rulings "are not the same as formal guidance — and everyone who wants to do retrofit storage should be aware of the risks."
"The opportunity for retrofitted residential storage to claim the ITC when paired with existing solar greatly improves the retrofit opportunity thanks to improved economics," Brett Simon, an energy storage analyst at GTM Research, tweeted March 2.
The tax credit cited in the March 2 private letter ruling is scheduled to be phased out by 2022.
