The Storage Act: Putting Energy Storage on a Level Playing Field

Given the intermittent nature of wind and solar, it is becoming increasingly clear that these technologies need a side-kick known as energy storage in order to get the full value of these renewable sources. Energy storage allows electricity produced by wind and solar, during off peak demand times, to be better matched when the electricity is needed. A major driver of growth of both the wind and solar industries has been favorable tax credit treatment. Acknowledging this fact, Congress has been working on game changing legislation aimed at the energy storage industry. On July 20, U.S. Senators Jeff Bingaman (D-NM), Ron Wyden (D-OR), and Jeanne Shaheen (D-NH) introduced The Storage Technology of Renewable and Green Energy Act of 2010 Act (STORAGE Act 2010 – S. 3617) revision to the Storage Act introduced in 2009.

There are three broad categories of storage covered by the proposed law are:

1) Utility-scale bulk storage.

2) Commercial business on-site storage.

3) Residential on-site storage.

The proposed law allocates $1.5 billion of tax credits for energy storage technologies deployed on the electricity grid.

For utility-scale, the Storage Act contemplates a 20 percent investment tax credit up to $30 million for any one project. The size of the storage system must be at least 1 MW of capacity with a rated output of at least one hour. For commercial business on-site storage, the Storage Act provides a 30 percent tax credit, up to $1 million for deployment of energy storage on premises to better manage electricity requirements, or provide a temporary resting spot for excess electricity produced on the grid. Systems must have a capacity of at least five kilowatts that can be discharged over four hours, or the energy equivalent 20 kilowatt hours. For residential on-site storage, the proposed law contemplates a 30 percent tax credit for systems that can store on-site the energy equivalent of at least of 500 watts of electricity for four hours, or two kilowatt hours of energy.

While it is very difficult to predict how the legislative processes will turn out, it appears that the Storage Act is close to becoming reality, most likely in 2011. If so, it should serve to transform the energy storage industry that Pike Research forecasts could reach 30 gigawatts by 2020.

Article by David Link, appearing courtesy Matter Network.