Battery + Storage Podcast
Analyzing the Impact of the IRA on Energy Storage
Dec 21, 2023
In this episode, the hosts discuss the transformative effects of the Inflation Reduction Act on the energy storage sector, including the standalone storage investment tax credit and its implications for storage financing. They also explore new opportunities for tax-exempt owners and investors, transferability deals, the impact of the domestic content bonus, and trends in renewable energy and storage finance. Additionally, they discuss the potential impact of higher rates on the industry.
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Quick takeaways
- The introduction of the standalone storage Investment Tax Credit (ITC) under the Inflation Reduction Act (IRA) has revolutionized storage financing, providing increased flexibility and opportunities.
- The IRA has expanded the options for utilizing the Investment Tax Credit (ITC) and Production Tax Credit (PTC), allowing tax-exempt owners to participate in the tax credits and enabling transferability for new investors, leading to varied investment structures and off-take agreements in the storage market.
Deep dives
Standalone storage ITC revolutionizes the storage sector
The Inflation Reduction Act (IRA) introduced a standalone storage Investment Tax Credit (ITC) that has brought significant changes to the storage sector. Previously, storage projects could only receive a federal tax credit if they were part of a generation project eligible for ITC, such as solar and wind projects. However, the IRA created a new standalone storage ITC that allows storage to qualify for the ITC independently, without restrictions on grid charging. This change opens up new possibilities for the financing and development of storage projects, providing increased flexibility and opportunities.
