‘‘(ii) which is designed to receive elec-
trical energy, to store such energy, and— 
‘‘(I) to convert such energy to 
electricity and deliver such electricity 
for sale, or 
‘‘(II) to use such energy to pro-
vide improved reliability or economic 
benefits to the grid. 
Such term may include hydroelectric pumped 
storage and compressed air energy storage, re-
generative fuel cells, batteries, superconducting 
magnetic energy storage, flywheels, thermal en-
ergy storage systems, and hydrogen storage, or 
combination thereof, or any other technologies 
as the Secretary, in consultation with the Sec-
retary of Energy, shall determine. 
‘‘(B) 
MINIMUM
CAPACITY.—The 
term 
‘qualified energy storage property’ shall not in-
clude any property unless such property in ag-
gregate has the ability to sustain a power rat-
ing of at least 1 megawatt for a minimum of 
1 hour. 
‘‘(C) ELECTRICAL GRID.—The term ‘elec-
trical grid’ means the system of generators, 
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transmission lines, and distribution facilities 
which— 
‘‘(i) are under the jurisdiction of the 
Federal Energy Regulatory Commission or 
State public utility commissions, or 
‘‘(ii) are owned by— 
‘‘(I) the Federal government, 
‘‘(II) a State or any political sub-
division of a State, 
‘‘(III) an electric cooperative that 
is eligible for financing under the 
Rural Electrification Act of 1936 (7 
U.S.C. 901 et seq.), or 
‘‘(IV) any agency, authority, or 
instrumentality of any one or more of 
the entities described in subclause (I) 
or (II), or any corporation which is 
wholly owned, directly or indirectly, by 
any one or more of such entities. 
‘‘(D) ALLOCATION OF CREDITS.— 
‘‘(i) IN
GENERAL.—In the case of 
qualified energy storage property placed in 
service during the taxable year, the credit 
otherwise determined under subsection (a) 
for such year with respect to such property 
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shall not exceed the amount allocated to 
such project under clause (ii). 
‘‘(ii) NATIONAL LIMITATION AND AL-
LOCATION.—There is a qualified energy 
storage property investment credit limita-
tion of $1,500,000,000. Such limitation 
shall be allocated by the Secretary among 
qualified energy storage property projects 
selected by the Secretary, in consultation 
with the Secretary of Energy, for taxable 
years beginning after the date of the enact-
ment of the STORAGE 2012 Act, except 
that not more than $40,000,000 shall be 
allocated to any project for all such taxable 
years. 
‘‘(iii) SELECTION CRITERIA.—In mak-
ing allocations under clause (ii), the Sec-
retary, in consultation with the Secretary 
of Energy, shall select only those projects 
which have a reasonable expectation of 
commercial viability, select projects rep-
resenting a variety of technologies, applica-
tions, and project sizes, and give priority 
to projects which— 
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‘‘(I) provide the greatest increase 
in reliability or the greatest economic 
benefit, 
‘‘(II) enable the greatest im-
provement in integration of renewable 
resources into the grid, or 
‘‘(III) enable the greatest in-
crease in efficiency in operation of the 
grid. 
‘‘(iv) DEADLINES.— 
‘‘(I) IN GENERAL.—If a project 
which receives an allocation under 
clause (ii) is not placed in service 
within 2 years after the date of such 
allocation, such allocation shall be in-
valid. 
‘‘(II) SPECIAL RULE FOR HYDRO-
ELECTRIC
PUMPED
STORAGE.—Not-
withstanding subclause (I), in the case 
of a hydroelectric pumped storage 
project, if such project has not re-
ceived such permits or licenses as are 
determined necessary by the Sec-
retary, in consultation with the Sec-
retary of Energy, within 3 years after 
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the date of such allocation, begun con-
struction within 5 years after the date 
of such allocation, and been placed in 
service within 8 years after the date 
of such allocation, such allocation 
shall be invalid. 
‘‘(III) SPECIAL RULE FOR COM-
PRESSED
AIR
ENERGY
STORAGE.— 
Notwithstanding subclause (I), in the 
case of a compressed air energy stor-
age project, if such project has not 
begun construction within 3 years 
after the date of the allocation and 
been placed in service within 5 years 
after the date of such allocation, such 
allocation shall be invalid. 
‘‘(IV) EXCEPTIONS.—The Sec-
retary may extend the 2-year period 
in subclause (I) or the periods de-
scribed in subclauses (II) and (III) on 
a project-by-project basis if the Sec-
retary, in consultation with the Sec-
retary of Energy, determines that 
there has been a good faith effort to 
begin construction or to place the 
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smartinez on DSK6TPTVN1PROD with BILLS
project in service, whichever is appli-
cable, and that any delay is caused by 
factors not in the taxpayer’s control. 
‘‘(E) REVIEW AND REDISTRIBUTION.— 
‘‘(i) REVIEW.—Not later than 4 years 
after the date of the enactment of the 
STORAGE 2012 Act, the Secretary shall 
review the credits allocated under subpara-
graph (D) as of the date of such review. 
‘‘(ii) REDISTRIBUTION.—Upon the re-
view described in clause (i), the Secretary 
may reallocate credits allocated under sub-
paragraph (D) if the Secretary determines 
that— 
‘‘(I) there is an insufficient quan-
tity of qualifying applications for cer-
tification pending at the time of the 
review, or 
‘‘(II) any allocation made under 
subparagraph (D)(ii) has been re-
voked 
pursuant 
to 
subparagraph 
(D)(iv) because the project subject to 
such allocation has been delayed. 
‘‘(F) DISCLOSURE OF ALLOCATIONS.—The 
Secretary shall, upon making an allocation 
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