Energy Storage

5 Benefits of Energy Storage

Energy storage is considered the “Holy Grail” for the energy sector because it allows for stockpiling power when business and consumers need it most.

  1. Energy storage gives renewable energy more value. Energy storage addresses renewable energy’s intermittency challenge so that these sources of energy are available even when the sun doesn’t shine or the wind doesn’t blow.
  2. Energy storage keeps the lights on. In the same way a backup generator provides power during outages or climate events, medium and long-term energy storage can provide consumers power when they would otherwise have none.
  3. Energy storage lowers energy costs for consumers. Energy storage allows customers to avoid premium pricing that utilities charge during times of peak demand. It also safeguards against grid “wear and tear” so higher maintenance costs are not passed along to consumers.
  4. Energy storage leads to cleaner air and water. Energy storage alleviates the need to have traditional baseload power and gives locales more choices about which energy sources to use. Energy storage also smooths demand peaks or supply short-term power to allow a generator to more gradually ramp up which reduces emissions in the process.
  5. Energy storage benefits all energy sources. With the addition of energy storage systems, any form of power generation can be fit to meet the needs of consumer demand.

Facts about the Energy Storage Investment Tax Credit (H.R.2096, & S.1142)

Due to its nascent development, energy storage deployment faces financing challenges which could be easily reconciled through an existing Investment Tax Credit (ITC), which would help spur demand for innovation to advance the technology. Currently, no such financing vehicle exists.

S.1142 & H.R.2096 are not extenders to the existing tax laws; instead, the legislation simply adds energy storage as an eligible tax credit while also clarifying how energy storage is credited. Clarifying eligibility of the ITC for energy storage will create a level playing field across electric grid technologies, improve business certainty, and allow energy storage to pair with any type of generation asset. Doing so will enhance grid efficiency and resilience while creating more jobs and capital formation.

As we have seen in other clean energy sectors, the technology parity through the bills would result in the injection of large-scale private-sector financing for these energy storage systems. However, the ITC begins ramping down after 2019, so Congress must act this year if energy storage will realize real benefit from the incentive.

Under current law, energy storage only qualifies for the ITC when integrated with ITC-eligible resources under a narrow set of conditions creating tremendous uncertainty for investors, consumers, and the grid. The current legislation has several important considerations:

  • The legislation is energy neutral. Several technologies are already currently eligible for the ITC, including solar, fuel cells, small wind turbines, geothermal heat pumps and micro gas turbines. The legislation would simply add energy storage technology to the list, making it a stand-alone technology eligible for the ITC, irrespective of what type of energy flows into it.
  • The legislation is technology neutral. All types of energy storage systems qualify, including pumped air, chemical, batteries, pumped hydro, among others.
  • The energy storage ITC is good policy. Current tax treatment – or the “75% Cliff” – is bad policy. Current policy hinders the ability of companies and potential investors to obtain the tax equity they need to fund large-scale projects. Additionally, retrofits are not allowed under current law and many current owners of power-producing facilities see tremendous benefits to consumers by adding energy storage.
  • The energy storage ITC is not an “extender”. This legislation would be to add a new technology to the existing ITC at its current ramp-down schedule.
  • The energy storage ITC is a minimal cost. With a Joint Committee on Taxation “score” of only $310 million/10 years, adding energy storage technology to the ITC comes at a far lower cost than many tax incentives.
  • The energy storage ITC is an economic driver. Energy storage technologies—grid batteries, pumped hydropower, compressed air, thermal storage, etc.—are uniquely flexible resources that have an economy-wide impact. Over 70,000 people are employed in the U.S. energy storage industry. Adding certainty to the market would grow the burgeoning industry. Energy storage is largely considered to be where solar technologies were a decade ago. Energy storage is poised to explode with exponential growth if projects can clear the cost hurdle.

For more information on energy storage, visit the Energy Storage Association.

More Resources & News Articles

Opinion: Congress Has a Chance to Pass Meaningful Energy Legislation (Morning Consult)

Opinion: Advanced energy storage could be Ohio’s next boom, with the help of federal investment tax credits (

Opinion: Gardner bill would give a needed boost to renewable-energy storage (Colorado Politics)

Opinion: A step that could reshape the energy economy (The Charlotte Observer)

Opinion: A brighter future: why energy storage belongs in the investment tax credit (Utility Dive)

Opinion: Colorado poised to become advanced energy leader with Congress’ help (The Colorado Sun)

Opinion: Energy storage can help California avoid major blackouts (Morning Consult)

Opinion: Energy storage tax credit will boost green economy (Times Union)

#StorageITC: ‘No other policy can accelerate energy storage industry as quickly’ (Energy Storage News)

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