By Frank Andorka, Senior Correspondent
What Happened: In response to a letter from a couple who wanted to know if they could claim the battery with which they retrofitted their solar system as part of the 30% investment tax credit (ITC), the IRS
- Provided an extraordinarily narrow “yes” answer to the question; but
- While not a blanket yes to all cases, likely opens market for retrofits
- Provides a captured market for energy storage, rapidly declining in costs
SolarWakeup’s View: Truth is, many people in the distributed solar space have assumed that this was already the case. What is the news here, however, is what this could mean for the distributed-generation (DG) solar market.
While the immediate application is for residential customers (as that’s who the query came from), there are benefits to the commercial & industrial (C&I) segment, too. It shows that the IRS, even in this anti-solar political atmosphere
at the federal level, recognizes that the coupling of solar and storage are a critical part of the overall picture for DG solar.
As more businesses recognize that formulation, it will encourage them to add solar to their electricity-generation mix. Plus, collecting the reward as a tax break makes the reimbursement mechanism much more efficient for businesses to understand and gain the ITC’s benefits. California is in a NEM 2.0 transition that includes higher demand charges and time of use rates, makes the financial case for storage to be included with on-site generation.
Costs for energy storage have declined rapidly in the past year. Adding storage to existing solar installations will likely drive new hardware systems using dc-coupled architecture. While it is more complicated on the software, it allows for energy storage to be integrated with the existing solar inverter without having to replace it. FlexGen, an energy storage supplier, spoke with Yann Brandt at SolarWakeup Live! New York about the trend towards dc-coupled storage. The IRS guidance necessarily lowers the overall costs of installation, which is going to increase the potential for solar penetration in this underserved market.
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