Maryland Passes America's First Tax Credit for Energy Storage

Tax credits for renewable energy projects, such as solar and wind installations, cheer clean-technology advocates and flummox opponents. While recent advances in design helped these technologies generate renewable power far more efficiently and cheaply, it is hard to argue against the role tax credits and other financial incentives played in giving these new sources of power a lift.

What if similar developments start to occur for energy storage solutions?

Maryland is the first state in the U.S. to pass legislation that will provide tax credits, not cash rebates, to consumers and businesses that invest in energy storage systems.

Senate Bill 758 will offer a 30 percent tax credit on the costs of installing an energy storage system. Such installations launched between New Year’s Day of 2018 and the end of 2022 will net up to a $5,000 tax credit for a residential property. Commercial properties can bank up to a $75,000 credit for installing energy storage. (Earlier versions of the legislation suggested a maximum of $150,000 for commercial owners.)

Any system that can store electrical power -- or mechanical, chemical or thermal energy that was once electrical power -- and that either stores this power for use at a later date or to offset electricity generation at peak times will be eligible in Maryland’s program.

The bill is now waiting for Gov. Larry Hogan's signature. The legislation passed an overwhelmingly Democratic legislature, but its unanimous passage in the state Senate and 101-11 approval in the House makes a veto by the Republican governor highly unlikely.

Could other states follow suit and boost the proliferation of products such as Tesla’s Powerwall to the point that they become a familiar sight in homes and offices?

Julian Spector of Greentech Media argues that Maryland is taking a far more free-market approach than states such as California, Oregon and Massachusetts.

California, for example, will require its three largest utilities to procure 1.3 gigawatts of energy storage technologies by 2020. That program could help spark more research and innovation in this nascent field, but it also requires a significant amount of funds from California’s state budget.

California's Self-Generation Incentive Program (SGIP) will disburse rebates to businesses and consumers, which behooves Sacramento to ensure these monies are available. And as anyone familiar with California's budget knows, the axe could fall if the state suffers shortfalls the way it did during the 1990s and 2000s.

Maryland, however, will simply risk losing a small amount of future tax revenues. And in any event, its energy storage program will be a first-come-first-served scheme. Legislators who are interested in such an initiative, but know the state's governor, their fellow representatives or the electorate will balk at the costs, could be inspired to adopt what is more of a free-market approach.

A similar effort recently failed in Hawaii, but that bill included a cash rebate system. If Maryland’s effort on this front succeeds, look for both blue and red states to follow.

Politicians on both sides of the aisle have touted renewables as a way to burnish their environmental credentials while offering residents and business the opportunity to save money on electricity costs. But as we all very well know, the amount of power such technologies can generate is variable.

As many environmental groups point out, energy storage and battery technology can help smooth out the lulls when the sun sets or wind dies down. And if the result is cheaper and more seamless electrical power, the Donald Trump administration’s focus on the development of coal and other fossil fuels could soon become a moot point.

Image credit: Wally Gobetz/Flickr