US Senate Republicans propose sparing batteries harshest elements of anti-Green New Deal legislation

Legislation proposed by Republicans in the US Senate would spare energy storage-related investment tax credits (ITCs) the sort of draconian cuts proposed for solar and wind generation and manufacturing sites.

Documents released by Mike Crapo, a Republican representative for Idaho and chair of the Senate’s Finance Committee, propose leaving in place advanced manufacturing tax credits for factories which make battery energy storage components.

While wind power and critical mineral manufacturing sites would see their tax credits reduced, battery component fabs would retain full tax credits through 2029, falling by 25% increments in 2030, 2031, and 2032, as introduced by previous president Joe Biden’s Green New Deal clean energy incentives package.

The only restriction envisaged for battery fabs by the finance committee would involve ending credits for factories established by, or with material help from, “prohibited foreign entities.”

Similarly the only change to the terms of the Advanced Project Credits extended to clean energy sites, under the Green New Deal, would see the relevant Secretary of State unable to reissue any credits for projects which fail to meet eligibility criteria.

In terms of the 6% to 30% clean electricity ITC, for generation and energy storage sites, while the finance committee has brought forward the phasing out of credits for wind and solar projects, energy storage sites would continue to enjoy the full ITC through 2033, falling to 75% in 2034, and to 50% in 2035, before expiring in 2036, as envisioned in Biden’s legislation. The only caveats for battery ITCs would relate to prohibited foreign entities, on the basis described above; and the removal of such ITC availability until United States greenhouse gas emissions fall to 25% of their 2022 level in the case that would occur after the deadlines outlined above.

There is less positive news in prospect for small-scale energy storage systems, however, with the draft legislation proposing an end to the 30% tax credit currently available for home batteries through 2032, and due to fall thereafter. The finance committee legislation would close that credit for systems installed 180 days after the legislation is published.

A special, five-year capital investment amortization period for energy storage systems used by businesses would be ended immediately upon publication of the finance committee’s proposed law.

The draft law will be presented as part of Senate Republicans’ Budget Reconciliation Bill, which enables federal budget related legislation to be passed without the 60-vote “super-majority” threshold otherwise required under the body’s filibuster rule.