A new report from the Iowa Economic Development Authority (IEDA) makes a series of recommendations for energy storage, including a tentative endorsement of a tax credit for battery storage systems.
To date, only one state, Maryland, has passed an energy storage tax credit. Maryland’s energy storage tax credit is for 30% of the cost of a storage system and is capped at $5,000 for residential properties and $75,000 for commercial properties with $750,000 overall, annual limit.
The existing federal energy storage tax credit is available only for storage projects paired with renewable energy projects, such as wind or solar farms, that are charged at least 75% by renewable energy. The 30% federal tax credit is scheduled to be reduced to 10% by 2022.
In April, Rep. Mike Doyle, a Democrat from Pennsylvania, introduced a bill in the U.S. House of Representatives calling for a 30% stand-alone energy storage tax credit.
The report, by the IEDA’s Iowa Energy Office, recommended that state policymakers should monitor the federal legislative actions and if a dedicated energy storage tax is passed, “Iowa should consider offering a complementary state incentive like its solar tax incentives.”
The report also recommends that the economic development agency should fund a study to evaluate the potential benefits of expanding energy storage facilities in Iowa and to identify barriers to that expansion.
The report acknowledges that the monetary value, as well as the many value streams of energy storage, “is difficult to capture.” The result is that calculating the cost-benefit analysis of a storage project is challenging because a “significant portion of the benefits are projected or estimated,” according to the authors of the report.
The report highlight’s the ability of energy storage to reduce peak electrical loads and recommends that the IEDA and the state’s Department of Transportation continue to encourage the addition of energy storage for its peak shaving capabilities when developing and expanding future electric vehicle infrastructure. “Charging stations paired with storage pilot projects could provide operational data and real-world economics to understand the potential benefits of storage as it relates to EV infrastructure and implementation challenges,” the authors said.
The Iowa Energy Office also said it would grant “special consideration” to projects seeking funding that include energy storage element and it would encourage the Iowa Energy Center to also do so. That, the authors said, could “lay the ground work” for more storage pilot projects.
The report also noted the resiliency benefits of energy storage and recommended that the IEDA continue to work with industry to investigate and communicate those benefits.
The authors also recommended that the IEDA collaborate with the state’s Department of Public Safety to gain greater visibility on building codes, standards and regulations that are restricting the advancement of storage.
The authors of the report were advised by a panel drawn from academia, environmental groups, several utilities, and representatives from the Midcontinent ISO and the Iowa National Guard.
The report was written “to spark conversation and discussion on how Iowa should best prepare for this new technology,” the authors said.
The report is available here.