Current:Home > NewsAdding Batteries to Existing Rooftop Solar Could Qualify for 30 Percent Tax Credit -MoneyFlow Academy
Adding Batteries to Existing Rooftop Solar Could Qualify for 30 Percent Tax Credit
View
Date:2025-04-15 17:39:31
Stay informed about the latest climate, energy and environmental justice news by email. Sign up for the ICN newsletter.
Homeowners with rooftop solar tied into the grid like the way they can roll back their meters by selling surplus electricity back to the power company. But there’s a drawback: when the grid goes down in a storm, their lights go off too, unless they paid to install a bank of batteries.
Now, with battery prices getting cheaper, some homeowners are thinking about beefing up their solar arrays with battery storage and possibly cutting ties with the grid altogether.
The taxman just gave them another incentive to do so, making clear that the improvement qualifies for another fat tax credit just like the one they earned when they put up their panels in the first place.
The Internal Revenue Service released a private letter ruling on Friday stating that a customer with an existing home solar array is eligible for a 30 percent federal tax credit when they buy and install a battery system, provided it stores only solar energy from their own roof.
The private letter ruling was issued to a single taxpayer; it applies only to that specific case, and the IRS says it doesn’t set a precedent. Even so, it tells accountants everywhere how the agency is interpreting the tax law.
It suggests that taxpayers can now rest easy taking the tax credit when adding batteries to an existing solar setup, even if they claimed the tax credit when they set up their grid-tied panels, as long as the battery receives power only from the home’s solar panels and none from the grid.
It’s a fairly simple matter to comply with the proviso by installing controls that don’t allow power from the grid to go to the battery. It would charge only when the solar panels are generating power.
‘A Milestone’ for Solar-Plus-Storage
The ruling “marks a milestone” for the residential storage-plus-solar industry, said Kelly Speakes-Backman, CEO of Energy Storage Association.
“The 30 percent credit is like jumping ahead five years on the cost curve for home battery systems—so on that count, customers will be able to afford longer-duration systems sooner and present greater opportunity for self-reliance,” she said.
Most rooftop solar customers in the U.S. are still tied to the grid, and many have no backup batteries attached. Tesla’s Powerwall is changing the landscape, but it’s still upward of $7,000 on top of the cost of a solar array. The tax credit would put a dent in the cost.
What About Storage With Wind Power?
The Energy Storage Association is lobbying Congress to pass legislation that better clarifies the eligibility of energy storage for the tax credit and allow storage to pair with other energy sources, such as wind, in addition to solar.
But this ruling is a step in the right direction, energy storage experts say.
“While most batteries being offered to homeowners today are not large enough to enable full disconnection from the grid when paired with solar, they are certainly critical to helping folks manage their electric bills and ensure uninterrupted service after storms and other common sources of outages,” Speakes-Backman said. “Whether or not you are on the grid, the battery paired with solar definitely puts more power into your own hands.”
The solar Investment Tax Credit for homes remains at 30 percent though 2019, then drops to 26 percent in 2020, and 22 percent in 2021 before ending at the end of that year.
veryGood! (41)
Related
- Which apps offer encrypted messaging? How to switch and what to know after feds’ warning
- California Community Organizer Wins Prestigious Goldman Environmental Prize
- Two more people sentenced for carjacking and kidnapping an FBI employee in South Dakota
- Affluent Americans are driving US economy and likely delaying need for Fed rate cuts
- 'Survivor' 47 finale, part one recap: 2 players were sent home. Who's left in the game?
- NFL draft takeaways: Cowboys passing on RB opens door to Ezekiel Elliott reunion
- Gypsy Rose Blanchard to Share So Much More Truth in Upcoming Memoir
- Candace Parker, a 3-time WNBA champion and 2-time Olympic gold medalist, announces retirement
- What to watch: O Jolie night
- Dead infant found at Florida university campus; police investigating
Ranking
- Juan Soto praise of Mets' future a tough sight for Yankees, but World Series goal remains
- The real migrant bus king of North America isn't the Texas governor. It's Mexico's president.
- Caitlin Clark 'keeps the momentum rolling' on first day of Indiana Fever training camp
- Candace Parker announces her retirement from WNBA after 16 seasons
- US appeals court rejects Nasdaq’s diversity rules for company boards
- Rihanna Reveals Why Her 2024 Met Gala Look Might Be Her Most Surprising Yet
- Joel Embiid peeved by influx of Knicks fans in Philly, calls infiltration 'not OK'
- Clayton MacRae: Raise of the Cryptocurrencies
Recommendation
'Survivor' 47 finale, part one recap: 2 players were sent home. Who's left in the game?
Tornadoes leave a trail of destruction in Oklahoma, communities begin to assess damage
Migration roils US elections. Mexico sees mass migration too, but its politicians rarely mention it
Rihanna Reveals Why Her 2024 Met Gala Look Might Be Her Most Surprising Yet
Tarte Shape Tape Concealer Sells Once Every 4 Seconds: Get 50% Off Before It's Gone
Powerball winning numbers for April 27 drawing: Lottery jackpot rises to $149 million
Missing teen child of tech executives found safe in San Francisco, suspect in custody
From a sunbathing gator to a rare bird sighting, see this week's top wildlife photos