Energy Storage Tax Incentive and Deployment Act of 2021
Bill: S.627 | Sponsor: Sen. Heinrich, Martin (D-NM)
Policy area: Taxation

Summary:
Energy Storage Tax Incentive and Deployment Act of 2021
This bill allows tax credits for (1) energy storage technologies, and (2) battery storage technology.
The bill expands the tax credit for investments in energy property to include equipment that (1) receives, stores, and delivers energy using batteries, compressed air, pumped hydropower, hydrogen storage (including electrolysis), thermal energy storage, regenerative fuel cells, flywheels, capacitors, superconducting magnets, or other technologies identified by the Internal Revenue Service; and (2) has a capacity of at least five kilowatt hours.
The bill also expands the tax credit for residential energy efficient property to include expenditures for battery storage technology that (1) is installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer, and (2) has a capacity of at least three kilowatt hours.

To amend the Internal Revenue Code of 1986 to provide tax credits for 
          energy storage technologies, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Energy Storage Tax Incentive and 
Deployment Act of 2021''.

SEC. 2. ENERGY CREDIT FOR ENERGY STORAGE TECHNOLOGIES.

    (a) In General.--Subclause (II) of section 48(a)(2)(A)(i) of the 
Internal Revenue Code of 1986 is amended by striking ``paragraph 
(3)(A)(i)'' and inserting ``clause (i) or (ix) of paragraph (3)(A)''.
    (b) Energy Storage Technologies.--Subparagraph (A) of section 
48(a)(3) of the Internal Revenue Code of 1986 is amended by striking 
``or'' at the end of clause (vii), by adding ``or'' at the end of 
clause (viii), and by adding at the end the following new clause:
                            ``(ix) equipment which receives, stores, 
                        and delivers energy using batteries, compressed 
                        air, pumped hydropower, hydrogen storage 
                        (including electrolysis), thermal energy 
                        storage, regenerative fuel cells, flywheels, 
                        capacitors, superconducting magnets, or other 
                        technologies identified by the Secretary in 
                        consultation with the Secretary of Energy, and 
                        which has a capacity of not less than 5 
                        kilowatt hours,''.
    (c) Phaseout of Credit.--Paragraph (6) of section 48(a) of the 
Internal Revenue Code of 1986 is amended--
            (1) by striking ``energy'' in the heading and inserting 
        ``and energy storage''; and
            (2) by striking ``paragraph (3)(A)(i)'' both places it 
        appears and inserting ``clause (i) or (ix) of paragraph 
        (3)(A)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2020.

SEC. 3. RESIDENTIAL ENERGY EFFICIENT PROPERTY CREDIT FOR BATTERY 
              STORAGE TECHNOLOGY.

    (a) In General.--Subsection (a) of section 25D of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``and'' at the end of paragraph (5), and
            (2) by adding at the end the following new paragraph:
            ``(7) the qualified battery storage technology 
        expenditures,''.
    (b) Qualified Battery Storage Technology Expenditure.--Subsection 
(d) of section 25D of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new paragraph:
            ``(7) Qualified battery storage technology expenditure.--
        The term `qualified battery storage technology expenditure' 
        means an expenditure for battery storage technology which--
                    ``(A) is installed on or in connection with a 
                dwelling unit located in the United States and used as 
                a residence by the taxpayer, and
                    ``(B) has a capacity of not less than 3 kilowatt 
                hours.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures paid or incurred in taxable years beginning after 
December 31, 2020.
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