The updated rule, passed before the start of 2016, extends the 30 percent ITC until 2021 and aims to clear up some of the confusion with regards to when solar energy storage qualifies for the tax credit.
“The federal government does not want to incentivize people to arbitrage energy from the grid,” Senior Consultant at the Engineering consultant firm DNV-GL Mike Kleinberg explains. “You cannot charge from the grid in the evening and then discharge during the day to supplement your PV — and also qualify for the ITC, because you’re not then really charging from renewable energy.”
In order to accomplish this, the IRS dictated that in order to be eligible for the ITC, taxpayers must not draw more than 25 percent of stored electricity from the grid. Additionally, if they draw more than 25 percent of power from the grid during the first year of applying for the credit, they will not be allowed to collect any portion of the energy tax credit in later years even if the system improves and complies.
In order to prevent batteries charging more than 25 percent from the grid, homeowners have taken to installing inverters on both their PV systems and their AC/DC power systems, linking them to a site master controller that monitors when and how fast storage units charge.
While the updated 2015 rule might seem more strict than the original one set forth two years earlier (which was much more vague about solar battery two-way grid charging) it also expands its definition of what constitutes “storage technology”, allowing for greater flexibility when applying for the credit.
For example, smart water heaters or ceramic heaters that know the weather and draw 25 percent or less from the grid would qualify.