U.S. utility-scale battery projects sell tax credits for near $10m

Four utility-scale energy storage projects in Massachusetts have sold their Inflation Reduction Act investment tax credits for nearly $10 million. The battery energy storage projects range from 9 MWh to 22 MWh in storage capacity and will provide various grid services to participating municipal utilities.

The batteries were installed as part of a plan by developer Lightshift Energy, which is working with the Massachusetts Municipal Wholesale Electric Company (MMWEC) and its member utilities to deploy up to 50 MW of two- to four-hour battery energy storage projects. Lightshift said the batteries could save municipalities more than $200 million.

The developer said the batteries will be used to reduce peaks in grid demand and for arbitrage – charging during cheaper-electricity daytime hours and discharging during more expensive evening periods. Grid patterns in the New England independent system operator region have regularly exhibited a “solar duck curve” since at least 2018, a phenomenon which sees solar assets boost electricity generation during daytime hours when demand is lowest.

The duck curve presents an opportunity for energy storage to capitalize on price arbitrage and the region’s Clean Peak and ConnectedSolutions programs aim to shave regional demand peaks by incentivizing energy storage.

One of Lightshift’s batteries, a 3 MW/9 MWh system manufactured by Trina Energy Storage, was installed for the Paxton Municipal Light Department and connected directly to a local substation. It is expected to save the utility more than $10 million in energy costs over the life of the contract.

The largest of the four batteries, a 5 MW/22 MWh system, was completed in Holden, Massachusetts in August.

The Wakefield battery, which combines grid backup power with the additional energy services offered at the other facilities, is expected to be completed by summer. The town’s Energy Park website is tracking battery installation progress using images and also features information on a 2.5 MW backup gas generator.

Basis Climate, which specializes in monetizing tax credits, identified a buyer for the packages and handled the sale process. The company has expertise in documentation for small and large transactions, and says it has completed “hundreds of millions of dollars of tax credit transfers,” ranging in value from $355,000 to $100 million.

As part of its technical verification, Basis Climate confirmed contractors working for Lightshift made proper payments. The developer noted that because each project exceeded 1 MW (AC) in capacity, prevailing wages and apprenticeship labor were required to qualify for the full tax credits. Basis Climate partnered with Dili, which employed an artificial intelligence-powered “general diligence solution” to verify wage compliance.

From pv magazine USA.