Proposed US Storage Act Could Boost the Residential Storage Market

on July 02, 2013 at 2:00 PM

US Republican Representative Peter King

The US Senate introduced the STORAGE 2013 Act in early April 2013 as a follow-up to the STORAGE 2011 Act. The proposed act offers a 20% investment tax credit for grid-tied systems up to $40 million per project along with a 30% investment tax credit for on-site systems up to $ 1 million per project. Notably, the credit applies to systems as small as 5 kWh, making many models of residential storage systems eligible for tax credit that were not eligible under the 2011 act.

Undoubtedly, the act, if passed, would have a tremendous impact on the on-site and grid storage markets in the United States. With a total program cap of $1.5 billion, the program could theoretically fund the addition of $7.5 billion worth of storage projects or approximately 7.5 GWh of capacity. Such installations would overhaul the US grid storage market, which sits at a cumulative capacity of 1 GWh today. Additionally, it would overshadow Germany’s incentive plan for small-scale, solar-tied storage projects to become the greatest national storage incentive program.

However, this news, along with any news on legislative action, should be tempered with a dose of realism. There is a real possibility that the act will not pass the Senate and House, and there is an almost definite chance that the act will not pass unaltered in scope, budget or eligibility requirements. Furthermore, residential storage will still only be financially viable in select markets with high peak pricing even after the addition of a 30% tax credit. If battery OEMs can offer residential multi-hour lithium-ion systems at a complete system cost of $1,000/kWh, then markets including Massachusetts, New York, California and Wisconsin will begin to adopt residential storage based on the value proposition for peak shaving.

Steven Minnihan: June 28, 2013 via Smart Grid News

Steven Minnihan is a senior analyst for the Grid Storage Intelligence service at Lux Research, which provides strategic advice and on-going intelligence for emerging technologies. For more information, visit the Lux Research site.