I 

114TH CONGRESS 

2D SESSION H. R. 5350 

To amend the Internal Revenue Code of 1986 to provide for an energy 

investment credit for energy storage property connected to the grid, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 26, 2016 

Mr. HONDA (for himself, Mr. REED, Mr. GIBSON, and Mr. TAKANO) introduced the following bill; which was referred to the Committee on Ways 

and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for an energy investment credit for energy storage property connected to the grid, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Energy Storage for 

5 Grid Resilience and Modernization Act of 2016’’ or the 

6 ‘‘Energy Storage Act of 2016’’. 


sradovich on DSK3TPTVN1PROD with BILLS
2 

•HR 5350 IH

1 SEC. 2. ENERGY INVESTMENT CREDIT FOR ENERGY STOR2 AGE PROPERTY CONNECTED TO THE GRID. 

3 (a) 30-PERCENT CREDIT ALLOWED.—Clause (i) of 

4 section 48(a)(2)(A) of the Internal Revenue Code of 1986 

5 is amended by striking ‘‘and’’ at the end of subclause (III) 

6 and by adding at the end the following new subclause: 

7 ‘‘(V) qualified energy storage prop8 erty, and’’. 

9 (b) QUALIFIED ENERGY STORAGE PROPERTY.—Sub10 section (c) of section 48 of such Code is amended by add11 ing at the end the following new paragraph: 

12 ‘‘(5) QUALIFIED ENERGY STORAGE PROP13 ERTY.— 

14 ‘‘(A) IN GENERAL.—The term ‘qualified 

15 energy storage property’ means property de16 scribed in subparagraph (B) that is capable of 

17 absorbing energy, storing such energy for a pe18 riod of time, and thereafter dispatching such 

19 energy for the purposes of— 

20 ‘‘(i) reducing demand for peak elec21 trical generation, 

22 ‘‘(ii) deferring or substituting for an 

23 investment in generation, transmission, or 

24 distribution assets, 

25 ‘‘(iii) providing back up energy for 

26 variable generation sources, 


sradovich on DSK3TPTVN1PROD with BILLS
3 

•HR 5350 IH

1 ‘‘(iv) improving the reliable operation 

2 of the electrical transmission or distribu3 tion grid, 

4 ‘‘(v) enabling management of end-user 

5 energy consumption, or 

6 ‘‘(vi) enabling the disconnection of a 

7 load from the main grid. 

8 ‘‘(B) STORAGE AND USE OF ENERGY.— 

9 Property is described in this subparagraph if 

10 the property, whether centralized or distrib11 uted— 

12 ‘‘(i) uses mechanical, chemical, ther13 mal, or electrostatic processes to store en14 ergy that was generated at one time for 

15 use at a later time, 

16 ‘‘(ii) stores thermal energy for direct 

17 use for heating or cooling at a later time 

18 in a manner that avoids the need to use 

19 electricity at that later time, 

20 ‘‘(iii) uses mechanical, chemical, ther21 mal, or electrostatic processes to store elec22 tricity generated from renewable resources 

23 for use at a later time, or 

24 ‘‘(iv) uses mechanical, chemical, ther25 mal, or electrostatic processes to store, for 


sradovich on DSK3TPTVN1PROD with BILLS
4 

•HR 5350 IH

1 delivery at a later time, energy generated 

2 from mechanical processes that would oth3 erwise be wasted. 

4 ‘‘(C) SPECIAL RULE FOR ONSITE ENERGY

5 STORAGE.— 

6 ‘‘(i) IN GENERAL.—Property which 

7 performs its purpose primarily for onsite 

8 consumption shall not be treated as quali9 fied energy storage property unless such 

10 property in aggregate— 

11 ‘‘(I) has the ability to store the 

12 energy equivalent of at least 5 kilo13 watt hours of energy, and 

14 ‘‘(II) has the ability to have an 

15 output of the energy equivalent of 1 

16 kilowatt of electricity for a period of 5 

17 hours. 

18 ‘‘(ii) LIMITATION.—In the case of 

19 qualified energy storage property described 

20 in clause (i) that is placed in service dur21 ing the taxable year, the credit otherwise 

22 determined under subsection (a) for such 

23 year with respect to such property shall 

24 not exceed $1,000,000. 

25 ‘‘(D) ALLOCATION OF CREDITS.— 


sradovich on DSK3TPTVN1PROD with BILLS
5 

•HR 5350 IH

1 ‘‘(i) IN GENERAL.—In the case of 

2 qualified energy storage property placed in 

3 service during the taxable year, the credit 

4 otherwise determined under subsection (a) 

5 for such year with respect to such property 

6 shall not exceed the amount allocated to 

7 such project under clause (ii). 

8 ‘‘(ii) NATIONAL LIMITATION AND AL9 LOCATION.—There is a qualified energy 

10 storage property investment credit limita11 tion of $2,000,000,000. Such limitation 

12 shall be allocated by the Secretary among 

13 qualified energy storage property projects 

14 selected by the Secretary, in consultation 

15 with the Secretary of Energy, for taxable 

16 years beginning after the date of the enact17 ment of the Energy Storage for Grid Resil18 ience and Modernization Act of 2016, ex19 cept that not more than $40,000,000 shall 

20 be allocated to any project for all such tax21 able years. 

22 ‘‘(iii) SELECTION CRITERIA.—In mak23 ing allocations under clause (ii), the Sec24 retary, in consultation with the Secretary 

25 of Energy, shall select only those projects 


sradovich on DSK3TPTVN1PROD with BILLS
6 

•HR 5350 IH

1 which have a reasonable expectation of 

2 commercial viability, select projects rep3 resenting a variety of technologies, applica4 tions, and project sizes, and give priority 

5 to projects— 

6 ‘‘(I) which provide the greatest 

7 increase in reliability or the greatest 

8 economic benefit, 

9 ‘‘(II) which enable the greatest 

10 improvement in integration of renew11 able resources into the grid, 

12 ‘‘(III) which enable the greatest 

13 increase in efficiency in operation of 

14 the grid, or 

15 ‘‘(IV) the owner of which has not 

16 received an allocation under this para17 graph for energy storage property for 

18 a different project. 

19 ‘‘(iv) DEADLINES.— 

20 ‘‘(I) IN GENERAL.—If a project 

21 which receives an allocation under 

22 clause (ii) has not commenced con23 struction within 2 years after the date 

24 of such allocation, such allocation 

25 shall be invalid. 


sradovich on DSK3TPTVN1PROD with BILLS
7 

•HR 5350 IH

1 ‘‘(II) SPECIAL RULE FOR HYDRO2 ELECTRIC PUMPED STORAGE.—Not3 withstanding subclause (I), in the case 

4 of a hydroelectric pumped storage 

5 project, if such project has not re6 ceived such permits or licenses as are 

7 determined necessary by the Sec8 retary, in consultation with the Sec9 retary of Energy, within 3 years after 

10 the date of such allocation, begun con11 struction within 5 years after the date 

12 of such allocation, and been placed in 

13 service within 8 years after the date 

14 of such allocation, such allocation 

15 shall be invalid. 

16 ‘‘(III) SPECIAL RULE FOR COM17 PRESSED AIR ENERGY STORAGE.— 

18 Notwithstanding subclause (I), in the 

19 case of a compressed air energy stor20 age project, if such project has not 

21 begun construction within 3 years 

22 after the date of the allocation and 

23 been placed in service within 5 years 

24 after the date of such allocation, such 

25 allocation shall be invalid. 


sradovich on DSK3TPTVN1PROD with BILLS
8 

•HR 5350 IH

1 ‘‘(IV) EXCEPTIONS.—The Sec2 retary may extend the 2-year period 

3 in subclause (I) or the periods de4 scribed in subclauses (II) and (III) on 

5 a project-by-project basis if the Sec6 retary, in consultation with the Sec7 retary of Energy, determines that 

8 there has been a good faith effort to 

9 begin construction or to place the 

10 project in service, whichever is appli11 cable, and that any delay is caused by 

12 factors not in the taxpayer’s control. 

13 ‘‘(E) REVIEW AND REDISTRIBUTION.— 

14 ‘‘(i) REVIEW.—Not later than 4 years 

15 after the date of the enactment of the En16 ergy Storage for Grid Resilience and Mod17 ernization Act of 2016, the Secretary shall 

18 review the credits allocated under subpara19 graph (D) as of the date of such review. 

20 ‘‘(ii) REDISTRIBUTION.—Upon the re21 view described in clause (i), the Secretary 

22 may reallocate credits allocated under sub23 paragraph (D) if the Secretary determines 

24 that— 


sradovich on DSK3TPTVN1PROD with BILLS
9 

•HR 5350 IH

1 ‘‘(I) there is an insufficient quan2 tity of qualifying applications for cer3 tification pending at the time of the 

4 review, or 

5 ‘‘(II) any allocation made under 

6 subparagraph (D)(ii) has been re7 voked pursuant to subparagraph 

8 (D)(iv) because the project subject to 

9 such allocation has been delayed. 

10 ‘‘(F) DISCLOSURE OF ALLOCATIONS.—The 

11 Secretary shall, upon making an allocation 

12 under subparagraph (D)(ii), publicly disclose 

13 the identity of the applicant, the location of the 

14 project, the energy storage project size and out15 put, and the amount of the credit with respect 

16 to such applicant. 

17 ‘‘(G) COORDINATION.— 

18 ‘‘(i) DENIAL OF DOUBLE BENEFIT.— 

19 The term ‘qualified energy storage prop20 erty’ does not include any property for 

21 which a credit is allowable under any pro22 vision of this section for the taxable year 

23 other than by reason of this paragraph. 

24 ‘‘(ii) SPECIAL RULE FOR SECTION

25 45.—The term ‘qualified energy storage 


sradovich on DSK3TPTVN1PROD with BILLS
10 

•HR 5350 IH

1 property’ shall not include any property 

2 with respect to which a credit is allowable 

3 under section 45 for the taxable year or 

4 any prior taxable year. 

5 ‘‘(H) TERMINATION.—No credit shall be 

6 allocated under subparagraph (D) for any pe7 riod ending after December 31, 2026.’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to periods after the date of the 

10 enactment of this Act, under rules similar to the rules of 

11 section 48(m) of the Internal Revenue Code of 1986 (as 

12 in effect on the day before the date of the enactment of 

13 the Revenue Reconciliation Act of 1990). 

14 SEC. 3. ENERGY STORAGE PROPERTY CONNECTED TO THE 

15 GRID ELIGIBLE FOR NEW CLEAN RENEWABLE 

16 ENERGY BONDS. 

17 (a) IN GENERAL.—Paragraph (1) of section 54C(d) 

18 of the Internal Revenue Code of 1986 is amended to read 

19 as follows: 

20 ‘‘(1) QUALIFIED RENEWABLE ENERGY FACIL21 ITY.—The term ‘qualified renewable energy facility’ 

22 means a facility which is— 

23 ‘‘(A)(i) a qualified facility (as determined 

24 under section 45(d) without regard to paraVerDate Sep 11 2014 23:09 May 31, 2016 Jkt 059200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H5350.IH H5350

sradovich on DSK3TPTVN1PROD with BILLS
11 

•HR 5350 IH

1 graphs (8) and (10) thereof and to any placed 

2 in service date), or 

3 ‘‘(ii) a qualified energy storage property 

4 (as defined in section 48(c)(5)), and 

5 ‘‘(B) owned by a public power provider, a 

6 governmental body, or a cooperative electric 

7 company.’’. 

8 (b) EFFECTIVE DATE.—The amendment made by 

9 this section shall apply to obligations issued after the date 

10 of the enactment of this Act. 

11 SEC. 4. CREDIT FOR RESIDENTIAL ENERGY STORAGE 

12 EQUIPMENT. 

13 (a) CREDIT ALLOWED.—Subsection (a) of section 

14 25D of the Internal Revenue Code of 1986 is amended 

15 by striking ‘‘and’’ at the end of paragraph (4), by striking 

16 the period at the end of paragraph (5) and inserting ‘‘, 

17 and’’, and by adding at the end the following new para18 graph: 

19 ‘‘(6) 30 percent of the qualified residential en20 ergy storage equipment expenditures made by the 

21 taxpayer during such taxable year.’’. 

22 (b) QUALIFIED RESIDENTIAL ENERGY STORAGE

23 EQUIPMENT EXPENDITURES.—Section 25D(d) of such 

24 Code is amended by adding at the end the following new 

25 paragraph: 


sradovich on DSK3TPTVN1PROD with BILLS
12 

•HR 5350 IH

1 ‘‘(6) QUALIFIED RESIDENTIAL ENERGY STOR2 AGE EQUIPMENT EXPENDITURES.—For purposes of 

3 this section, the term ‘qualified residential energy 

4 storage equipment expenditure’ means an expendi5 ture for property— 

6 ‘‘(A) which is installed in or on a dwelling 

7 unit located in the United States and owned 

8 and used by the taxpayer as the taxpayer’s 

9 principal residence (within the meaning of sec10 tion 121), or on property owned by the tax11 payer on which such a dwelling unit is located, 

12 ‘‘(B) which— 

13 ‘‘(i) provides supplemental energy to 

14 reduce peak energy requirements, or 

15 ‘‘(ii) is designed and used primarily to 

16 receive and store, firm, or shape variable 

17 renewable or off-peak energy and to deliver 

18 such energy primarily for onsite consump19 tion, and 

20 ‘‘(C) which— 

21 ‘‘(i) has the ability to store the energy 

22 equivalent of at least 5 kilowatt hours of 

23 energy, and 


sradovich on DSK3TPTVN1PROD with BILLS
13 

•HR 5350 IH

1 ‘‘(ii) has the ability to have an output 

2 of the energy equivalent of 1 kilowatt of 

3 electricity for a period of 4 hours.’’. 

4 (c) TERMINATION.—Section 25D(g) of such Code is 

5 amended by inserting ‘‘(December 31, 2026, in the case 

6 of property described in subsection (d)(6))’’ after ‘‘Decem7 ber 31, 2016’’. 

8 (d) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to property placed in service after 

10 the date of the enactment of this Act. 

Æ 


sradovich on DSK3TPTVN1PROD with BILLS