Energy storage projects enjoy three exemptions and three halvings

How has the energy storage industry progressed in 2024 & 2025?

The energy storage industry has continued to progress over the course of 2024 and into 2025, buoyed in significant part by the federal income tax benefits in the form of tax credits enacted under the Inflation Reduction Act of 2022 (IRA).

Are energy storage projects exempt from prevailing wage and apprenticeship requirements?

Two exemptions from the prevailing wage and apprenticeship requirements exist: Smaller-scale energy storage projects (under 1MW of storage capacity) qualify for the 30% bonus rate regardless of compliance with the prevailing wage and apprenticeship requirements.

Are IRA tax benefits a viable option for energy storage facilities?

While the vitality of the IRA tax benefits in their current form is currently subject to uncertainty given the results of the 2024 federal general election, the existing market practice for financing energy storage facilities since the IRA’s passage continues to evolve in reaction to the act’s new requirements and opportunities.

What are the New IRA rules for energy storage?

Energy storage was one of the major beneficiaries of the IRA’s new rules on both the deployment and manufacturing sides. The IRA enacted the long-sought investment tax credit (ITC) under Section 48 and 48E of the Internal Revenue Code (the Code) for standalone energy storage facilities.

What regulatory guidance has the government released on energy storage?

Of particular importance to the energy storage industry, the government has released final regulatory guidance for the ITC (both Section 48 and 48E of the Code), prevailing wage and apprenticeship (PWA) requirements, and transferability and direct payment, as well as other guidance on the energy community and domestic content tax credit “adders.”

Which energy storage technology qualifies for section 48E?

Any energy storage technology that qualifies under Section 48 also will qualify under Section 48E; this is a different standard than emission-based measurement for generation, which requires zero or net-negative carbon emissions.