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) intro-
duced 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 prop-
erty connected to the grid, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Energy Storage for 
Grid Resilience and Modernization Act of 2016’’ or the 
‘‘Energy Storage Act of 2016’’. 
VerDate Sep 11 2014 
23:09 May 31, 2016
Jkt 059200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5350.IH
H5350
sradovich on DSK3TPTVN1PROD with BILLS
SEC. 2. ENERGY INVESTMENT CREDIT FOR ENERGY STOR-
AGE PROPERTY CONNECTED TO THE GRID. 
(a) 30-PERCENT CREDIT ALLOWED.—Clause (i) of 
section 48(a)(2)(A) of the Internal Revenue Code of 1986 
is amended by striking ‘‘and’’ at the end of subclause (III) 
and by adding at the end the following new subclause: 
‘‘(V) qualified energy storage prop-
erty, and’’. 
(b) QUALIFIED ENERGY STORAGE PROPERTY.—Sub-
section (c) of section 48 of such Code is amended by add-
ing at the end the following new paragraph: 
‘‘(5) QUALIFIED
ENERGY
STORAGE
PROP-
ERTY.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
energy storage property’ means property de-
scribed in subparagraph (B) that is capable of 
absorbing energy, storing such energy for a pe-
riod of time, and thereafter dispatching such 
energy for the purposes of— 
‘‘(i) reducing demand for peak elec-
trical generation, 
‘‘(ii) deferring or substituting for an 
investment in generation, transmission, or 
distribution assets, 
‘‘(iii) providing back up energy for 
variable generation sources, 
VerDate Sep 11 2014 
22:24 Jun 01, 2016
Jkt 059200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H5350.IH
H5350
sradovich on DSK3TPTVN1PROD with BILLS
‘‘(iv) improving the reliable operation 
of the electrical transmission or distribu-
tion grid, 
‘‘(v) enabling management of end-user 
energy consumption, or 
‘‘(vi) enabling the disconnection of a 
load from the main grid. 
‘‘(B) STORAGE
AND
USE
OF
ENERGY.— 
Property is described in this subparagraph if 
the property, whether centralized or distrib-
uted— 
‘‘(i) uses mechanical, chemical, ther-
mal, or electrostatic processes to store en-
ergy that was generated at one time for 
use at a later time, 
‘‘(ii) stores thermal energy for direct 
use for heating or cooling at a later time 
in a manner that avoids the need to use 
electricity at that later time, 
‘‘(iii) uses mechanical, chemical, ther-
mal, or electrostatic processes to store elec-
tricity generated from renewable resources 
for use at a later time, or 
‘‘(iv) uses mechanical, chemical, ther-
mal, or electrostatic processes to store, for 
VerDate Sep 11 2014 
23:09 May 31, 2016
Jkt 059200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5350.IH
H5350
sradovich on DSK3TPTVN1PROD with BILLS
delivery at a later time, energy generated 
from mechanical processes that would oth-
erwise be wasted. 
‘‘(C) SPECIAL RULE FOR ONSITE ENERGY 
STORAGE.— 
‘‘(i) IN
GENERAL.—Property which 
performs its purpose primarily for onsite 
consumption shall not be treated as quali-
fied energy storage property unless such 
property in aggregate— 
‘‘(I) has the ability to store the 
energy equivalent of at least 5 kilo-
watt hours of energy, and 
‘‘(II) has the ability to have an 
output of the energy equivalent of 1 
kilowatt of electricity for a period of 5 
hours. 
‘‘(ii) LIMITATION.—In the case of 
qualified energy storage property described 
in clause (i) that is placed in service dur-
ing the taxable year, the credit otherwise 
determined under subsection (a) for such 
year with respect to such property shall 
not exceed $1,000,000. 
‘‘(D) ALLOCATION OF CREDITS.— 
VerDate Sep 11 2014 
22:24 Jun 01, 2016
Jkt 059200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H5350.IH
H5350
sradovich on DSK3TPTVN1PROD with BILLS
‘‘(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 
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 $2,000,000,000. 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 Energy Storage for Grid Resil-
ience and Modernization Act of 2016, ex-
cept that not more than $40,000,000 shall 
be allocated to any project for all such tax-
able 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 
VerDate Sep 11 2014 
23:09 May 31, 2016
Jkt 059200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H5350.IH
H5350
sradovich on DSK3TPTVN1PROD with BILLS
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— 
‘‘(I) which provide the greatest 
increase in reliability or the greatest 
economic benefit, 
‘‘(II) which enable the greatest 
improvement in integration of renew-
able resources into the grid, 
‘‘(III) which enable the greatest 
increase in efficiency in operation of 
the grid, or 
‘‘(IV) the owner of which has not 
received an allocation under this para-
graph for energy storage property for 
a different project. 
‘‘(iv) DEADLINES.— 
‘‘(I) IN GENERAL.—If a project 
which receives an allocation under 
clause (ii) has not commenced con-
struction within 2 years after the date 
of such allocation, such allocation 
shall be invalid. 
VerDate Sep 11 2014 
23:09 May 31, 2016
Jkt 059200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H5350.IH
H5350
sradovich on DSK3TPTVN1PROD with BILLS
‘‘(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 
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. 
VerDate Sep 11 2014 
23:09 May 31, 2016
Jkt 059200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H5350.IH
H5350
sradovich on DSK3TPTVN1PROD with BILLS
‘‘(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 
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 En-
ergy Storage for Grid Resilience and Mod-
ernization Act of 2016, 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— 
VerDate Sep 11 2014 
23:09 May 31, 2016
Jkt 059200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H5350.IH
H5350
sradovich on DSK3TPTVN1PROD with BILLS
‘‘(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 
under subparagraph (D)(ii), publicly disclose 
the identity of the applicant, the location of the 
project, the energy storage project size and out-
put, and the amount of the credit with respect 
to such applicant. 
‘‘(G) COORDINATION.— 
‘‘(i) DENIAL OF DOUBLE BENEFIT.— 
The term ‘qualified energy storage prop-
erty’ does not include any property for 
which a credit is allowable under any pro-
vision of this section for the taxable year 
other than by reason of this paragraph. 
‘‘(ii) SPECIAL
RULE
FOR
SECTION 
45.—The term ‘qualified energy storage 
VerDate Sep 11 2014 
23:09 May 31, 2016
Jkt 059200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H5350.IH
H5350
sradovich on DSK3TPTVN1PROD with BILLS
property’ shall not include any property 
with respect to which a credit is allowable 
under section 45 for the taxable year or 
any prior taxable year. 
‘‘(H) TERMINATION.—No credit shall be 
allocated under subparagraph (D) for any pe-
riod ending after December 31, 2026.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to periods after the date of the 
enactment of this Act, under rules similar to the rules of 
section 48(m) of the Internal Revenue Code of 1986 (as 
in effect on the day before the date of the enactment of 
the Revenue Reconciliation Act of 1990). 
SEC. 3. ENERGY STORAGE PROPERTY CONNECTED TO THE 
GRID ELIGIBLE FOR NEW CLEAN RENEWABLE 
ENERGY BONDS. 
(a) IN GENERAL.—Paragraph (1) of section 54C(d) 
of the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(1) QUALIFIED RENEWABLE ENERGY FACIL-
ITY.—The term ‘qualified renewable energy facility’ 
means a facility which is— 
‘‘(A)(i) a qualified facility (as determined 
under section 45(d) without regard to para-
VerDate 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
graphs (8) and (10) thereof and to any placed 
in service date), or 
‘‘(ii) a qualified energy storage property 
(as defined in section 48(c)(5)), and 
‘‘(B) owned by a public power provider, a 
governmental body, or a cooperative electric 
company.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act. 
SEC. 4. CREDIT FOR RESIDENTIAL ENERGY STORAGE 
EQUIPMENT. 
(a) CREDIT ALLOWED.—Subsection (a) of section 
25D of the Internal Revenue Code of 1986 is amended 
by striking ‘‘and’’ at the end of paragraph (4), by striking 
the period at the end of paragraph (5) and inserting ‘‘, 
and’’, and by adding at the end the following new para-
graph: 
‘‘(6) 30 percent of the qualified residential en-
ergy storage equipment expenditures made by the 
taxpayer during such taxable year.’’. 
(b) QUALIFIED RESIDENTIAL ENERGY STORAGE 
EQUIPMENT EXPENDITURES.—Section 25D(d) of such 
Code is amended by adding at the end the following new 
paragraph: 
VerDate Sep 11 2014 
23:09 May 31, 2016
Jkt 059200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H5350.IH
H5350
sradovich on DSK3TPTVN1PROD with BILLS
‘‘(6) QUALIFIED RESIDENTIAL ENERGY STOR-
AGE EQUIPMENT EXPENDITURES.—For purposes of 
this section, the term ‘qualified residential energy 
storage equipment expenditure’ means an expendi-
ture for property— 
‘‘(A) which is installed in or on a dwelling 
unit located in the United States and owned 
and used by the taxpayer as the taxpayer’s 
principal residence (within the meaning of sec-
tion 121), or on property owned by the tax-
payer on which such a dwelling unit is located, 
‘‘(B) which— 
‘‘(i) provides supplemental energy to 
reduce peak energy requirements, or 
‘‘(ii) is designed and used primarily to 
receive and store, firm, or shape variable 
renewable or off-peak energy and to deliver 
such energy primarily for onsite consump-
tion, and 
‘‘(C) which— 
‘‘(i) has the ability to store the energy 
equivalent of at least 5 kilowatt hours of 
energy, and 
VerDate Sep 11 2014 
23:09 May 31, 2016
Jkt 059200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H5350.IH
H5350
sradovich on DSK3TPTVN1PROD with BILLS
‘‘(ii) has the ability to have an output 
of the energy equivalent of 1 kilowatt of 
electricity for a period of 4 hours.’’. 
(c) TERMINATION.—Section 25D(g) of such Code is 
amended by inserting ‘‘(December 31, 2026, in the case 
of property described in subsection (d)(6))’’ after ‘‘Decem-
ber 31, 2016’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act. 
Æ 
VerDate Sep 11 2014 
23:09 May 31, 2016
Jkt 059200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6301
E:\BILLS\H5350.IH
H5350
sradovich on DSK3TPTVN1PROD with BILLS