Earlier this month, the office of Congressman Mike Honda (CA-17) reached out to NAATBatt International and asked for comments from its members on a bill that Congressman Honda hopes to introduce in Congress providing new support for stationary energy storage. NAATBatt is pleased by Congressman Honda’s interest in stationary energy storage and delighted that Congressman Honda, whose district includes Silicon Valley, has solicited the views of NAATBatt and its member firms on this important subject.
The bill that Congressman Honda proposes is similar to the STORAGE Act legislation proposed by Senator Ron Wyden (OR) in earlier sessions of Congress. Congressman Honda’s bill proposes to create a $2 billion pool of Section 48 tax credits that could be awarded to “qualified energy storage property” by the U.S. Secretary of the Treasury in consultation with the U.S. Secretary of Energy. The bill broadly defines “qualified energy storage property” to include mechanical, chemical and thermal processes to store energy for the purposes of improving the grid reliability, reducing peak electricity demand, deferring grid investment, backing up variable generation, and enabling management of end-user energy consumption.
Congressman Honda’s bill proposes some limitations on Section 48 credits for storage. Qualified energy storage property eligible for credits must have the ability to sustain a power rating of at least 1 megawatt for a minimum of 1 hour. In addition, no more than $60,000,000 of credits may be allocated to any single project.
The bill also proposes the provision of a 30% Section 25D tax credit to homeowners who install residential energy storage equipment in their principal residence. Qualified residential energy storage equipment must have the ability to store the energy equivalent of at least 2 kilowatt hours of energy. Qualified equipment may include property used to charge plug-in and hybrid electric vehicles, but only if such equipment or vehicles are equipped with smart grid equipment or services which control time-of-day charging and discharging of such vehicles.
Last week, the Policy Committee of NAATBatt International, including representatives from 10 of our members, met to consider Congressman Honda’s bill and prepare comments on the legislation for the benefit of Congressman Honda. Following deliberation, the Committee authorized me to deliver the following response to Congressman Honda, which I reproduce in its entirety below:
Dear [Congressman Honda]:
Thank you very much for sharing [your] proposed bill with NAATBatt International. As you know, NAATBatt International is the leading, U.S.-based trade association serving the interests of companies commercializing advanced electrochemical energy storage technology, including systems used to store electric energy on the grid.
Advanced electrochemical energy storage technology will be the lynchpin technology of the 21st Century. How to store more energy in less mass is the gating technological challenge of the machines and devices that will enhance human society in coming decades. Safer and more effective battery technology is essential for providing cleaner electricity, cleaner and safer motor vehicles, more effective medical devices, more powerful high energy weapons, better robotics and drones, and for enabling the internet of things. NAATBatt is delighted and extremely grateful that Congressman Honda has taken a personal interest in helping to support the development of this essential technology.
Last week, I convened a meeting of the NAATBatt International Policy Committee to review the draft bill in support of stationary energy storage that you sent me. Representatives of the following member companies of NAATBatt International participated in the review: XALT Energy, University of Kentucky, CSA Group, Snell & Wilmer, General Motors, Tucson Electric Power, EnerSys, Tronox, DNV GL, and Braille Battery. Please note that the views expressed in this e-mail below are the views of the NAATBatt International Policy Committee and not the views of any individual company.
Based upon the Policy Committee’s review of discussion of the draft bill, the Committee has asked me to transmit to you the following comments and suggestions concerning the draft legislation:
- Eliminate the Limit on System Size for Section 48 Credits. NAATBatt believes that the “1 megawatt for a minimum of 1 hour” size limit is a legacy of earlier legislative initiatives, the focus of which (frequency regulation) is of diminishing relative importance in promoting storage technology. One of the most promising areas for storage deployment today is in the commercial and industrial market. Many C&I storage products are 50kW or smaller. The Section 48 credit would help stimulate this important market. NAATBatt believes that the size limit for the Section 48 credit should be eliminated.
- Storage to Support xEV Recharging. Both Section 48 and Section 25D credits should be generally available for storage systems used to recharge xEV’s. Electric vehicle recharging is an important use of storage. The condition that such systems must be equipped with smart grid equipment or control the time of day charging and discharging of such vehicles is unnecessarily restrictive and should be eliminated.
- The Credits Should be Technologically Agnostic. There is some concern that the reference to “mechanical, chemical or thermal processes” is unnecessarily restrictive. Supercapacitors, which are based on an electrical process, might not be covered by that language. It is suggested that the phrase “mechanical, chemical or thermal” be eliminated or that, at a minimum, the word “electrical” be added to the list.
- No Conflict with the Existing ITC. Many developers and manufacturers obtain ITC’s for certain types of storage units under existing law. NAATBatt is concerned that the new credits proposed under this legislation do not conflict with the ITC or cause it to be cut back with respect to storage property.
- Limitation on Allocation of Credits. NAATBatt is concerned by the potential of a small number of large or politically connected owners and manufacturers to corner the limited pool of credits. NAATBatt suggests that the $60,000,000 per project limit also apply to individual owners and manufacturers.
- Clarification for Support of Existing Renewable Generation. NAATBatt would like the bill to be more clear that the Section 48 credits apply to storage property used to store electricity generated from “new or existing” renewable resources for use at a later time. New storage resources added to existing renewable generation should be eligible for the credit.
- Reduce the Ability of Government Agencies to Pick Winners. Technology is developing rapidly in energy storage and the market will move in unpredictable ways. NAATBatt is concerned with the wide discretion given to federal administrators to pick winners and losers through the allocation of tax credits. The Committee can suggest off hand no better idea as to how to allocate the limited pool of credits. But it wishes to express this concern.
Thank you again for reaching out to us. I very much hope that your office will consider NAATBatt International and its members a resource as Congressman Honda looks for ways to better support the development and commercialization of advanced electrochemical energy storage in the United States.