Making Imperiled Communities Resistant to Outages with Generation that is Resilient, Islandable, and Distributed Act
Bill: H.R.2482 | Sponsor: Rep. Panetta, Jimmy (D-CA)
Policy area: Taxation

Summary:
Making Imperiled Communities Resistant to Outages with Generation that is Resilient, Islandable, and Distributed Act or the MICROGRID Act
This bill allows a new tax credit for investment in qualified microgrid property. The bill defines qualified microgrid as an electrical system that incorporates a microgrid controller, includes equipment that is capable of generating not less that 4 kilowatts and not greater than 50 megawatts of electricity, is capable of operating in connection with the electrical grid and as a single controllable entity with respect to such grid, and is capable of operating independently (and disconnected) from such grid.

To amend the Internal Revenue Code of 1986 to provide tax credits for 
                          microgrid property.

    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 ``Making Imperiled Communities 
Resistant to Outages with Generation that is Resilient, Islandable, and 
Distributed Act'' or as the ``MICROGRID Act''.

SEC. 2. TAX CREDITS FOR MICROGRID PROPERTY.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 48C the following new section:

``SEC. 48D. MICROGRID PROPERTY.

    ``(a) In General.--For purposes of section 46, the microgrid 
property credit for any taxable year is an amount equal to the 
applicable percentage of the basis of the qualified microgrid property 
placed in service by the taxpayer during such taxable year.
    ``(b) Applicable Percentage.--For purposes of this section--
            ``(1) In general.--The term `applicable percentage' means, 
        with respect to qualified microgrid property which is part of 
        any qualified microgrid, the percentage determined in 
        accordance with the following table determined with respect to 
        the calendar year in which construction of such qualified 
        microgrid begins:


``In the case of calendar year:          The applicable percentage is:
  2025 or any prior calendar year......  30 percent
  2026.................................  26 percent
  2027.................................  22 percent
  2028.................................  10 percent.
 

            ``(2) Treatment of conversions.--In the case of any system 
        which is converted into a qualified microgrid, the construction 
        of such microgrid shall be treated for purposes of this 
        subsection as beginning on the date on which such conversion 
        begins.
    ``(c) Qualified Microgrid Property.--For purposes of this section--
            ``(1) In general.--The term `qualified microgrid property' 
        means any qualified property--
                    ``(A) which is part of a qualified microgrid,
                    ``(B) either--
                            ``(i) the construction, reconstruction, or 
                        erection of which is completed by the taxpayer, 
                        or
                            ``(ii) which is acquired by the taxpayer if 
                        the original use of such property commences 
                        with the taxpayer,
                    ``(C) which is not part of a bulk-power system (as 
                defined in section 215 of the Federal Power Act (16 
                U.S.C. 824o)), and
                    ``(D) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable.
            ``(2) Qualified microgrid.--The term `qualified microgrid' 
        means an electrical system which--
                    ``(A) incorporates a microgrid controller,
                    ``(B) includes equipment which is capable of 
                generating not less than 4 kilowatts and not greater 
                than 50 megawatts of electricity,
                    ``(C) is capable of operating in connection with 
                the electrical grid and as a single controllable entity 
                with respect to such grid, and
                    ``(D) is capable of operating independently (and 
                disconnected) from such grid.
            ``(3) Qualified property.--
                    ``(A) In general.--The term `qualified property' 
                means--
                            ``(i) microgrid controllers, and
                            ``(ii) electric distribution and switchgear 
                        property.
                    ``(B) Additional considerations.--Upon consultation 
                with the Secretary of Energy, the Secretary may 
                determine that a qualified property under this section 
                includes property connected to the bulk power system 
                (as defined in section 215 of the Federal Power Act (16 
                U.S.C. 824o)).
            ``(4) Microgrid controller.--The term `microgrid 
        controller' means, with respect to operation and islanding of a 
        qualified microgrid, the equipment which is necessary to 
        monitor and control the energy resources and loads on such 
        microgrid to maintain acceptable frequency, voltage, or 
        economic dispatch. Such term includes any software and 
        networking hardware necessary to the operation of such 
        equipment.
            ``(5) Electric distribution and switchgear property.--The 
        term `electric distribution and switchgear property' means, 
        with respect to operation and islanding of a qualified 
        microgrid, the equipment which is necessary to deliver electric 
        power from energy resources on such microgrid to loads on the 
        same such microgrid. Such term includes breakers, fuses, wires, 
        switchgear cabinets and bussing, paralleling switchgear, 
        transformers, power quality correction equipment, transfer 
        switches, disconnects, protective relays, metering equipment, 
        and wired and wireless communications equipment necessary to 
        the operation of such microgrid.
            ``(6) Treatment of spare parts.--Any qualified property 
        which is held by the taxpayer as a spare part for possible 
        replacement of qualified property which is part of a qualified 
        microgrid shall not fail to be treated as part of such 
        microgrid for purposes of this section.
    ``(d) Special Rules.--
            ``(1) Certain progress expenditure rules made applicable.--
        Rules similar to the rules of subsections (c)(4) and (d) of 
        section 46 (as in effect on the day before the date of the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this section.
            ``(2) Denial of double benefit.--No credit shall be 
        determined under this section with respect to the basis of any 
        property if a credit is determined under any other section of 
        this title with respect to such basis.
    ``(e) Allowance of Personal Credit for Residential Microgrids.--In 
the case of a qualified microgrid placed in service by any individual 
in the residence of such individual--
            ``(1) this section shall be applied without regard to 
        subparagraph (C) of subsection (c)(1), and
            ``(2) the microgrid property credit determined under this 
        section for any taxable year with respect to qualified 
        microgrid property (determined after application of paragraph 
        (1)) which is part of such qualified microgrid shall be taken 
        into account as an increase in the amount of the credit 
        otherwise allowable to the taxpayer under section 25D for such 
        taxable year.
    ``(f) Termination.--No credit shall be determined under this 
section with respect to any property placed in service after December 
31, 2028.''.
    (b) Elective Payment of Credit.--Subchapter B of chapter 65 of such 
Code is amended by adding at the end the following new section:

``SEC. 6431. ELECTIVE PAYMENT OF MICROGRID PROPERTY CREDIT.

    ``(a) Energy Property.--In the case of an eligible person making an 
election (at such time and in such manner as the Secretary may provide) 
under this section with respect to any portion of the credit determined 
under section 48D (determined without regard to subsection (d) of this 
section) or any portion of the credit allowed under section 25D by 
reason of section 48D(e) (as so determined), such eligible person shall 
be treated as making a payment against the tax imposed by subtitle A 
for the taxable year equal to the portion to which such election 
applies.
    ``(b) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Eligible person.--The term `eligible person' means--
                    ``(A) any organization exempt from tax under 
                section 501(a),
                    ``(B) any State or local government, or a political 
                subdivision thereof, or any agency, authority, or 
                instrumentality of any one or more of the foregoing, or 
                any corporation which is wholly owned, directly or 
                indirectly, by any one or more of the foregoing,
                    ``(C) any Indian tribal government,
                    ``(D) any organization described in section 
                1381(a)(2), and
                    ``(E) any not-for-profit electric utility which had 
                or has received a loan or loan guarantee under the 
                Rural Electrification Act of 1936.
            ``(2) Indian tribal government.--The term `Indian tribal 
        government' shall have the meaning given such term by section 
        139E.
            ``(3) Determination of credits.--The amount of any credit 
        described in subsection (a) which is treated as allowed to any 
        eligible person shall be determined for purposes of such 
        subsection in the same manner as though such eligible person 
        were subject to the tax imposed under chapter 1.
            ``(4) Timing.--The payment described in subsection (a) 
        shall be treated as made on--
                    ``(A) in the case of any government, or political 
                subdivision, to which paragraph (1) applies and for 
                which no return is required under section 6011 or 
                6033(a), the later of the date that a return would be 
                due under section 6033(a) if such government or 
                subdivision were described in that section or the date 
                on which such government or subdivision submits a claim 
                for credit or refund (at such time and in such manner 
                as the Secretary shall provide), and
                    ``(B) in any other case, the later of the due date 
                of the return of tax for the taxable year or the date 
                on which such return is filed.
            ``(5) Waiver of special rules.--In the case of an election 
        under this section, the determination of any applicable credit 
        shall be without regard to paragraphs (3) and (4)(A)(i) of 
        section 50(b).
            ``(6) Governmental entities treated as taxpayers.--In the 
        case of an election under this section--
                    ``(A) any State or local government, or a political 
                subdivision thereof, or
                    ``(B) any Indian tribal government,
        shall, to the extent not a taxpayer as defined under section 
        7701(a)(14), be treated as a taxpayer for purposes of this 
        section and determining any applicable credit.
    ``(c) Exclusion From Gross Income.--Gross income of the taxpayer 
shall be determined without regard to this section.
    ``(d) Denial of Double Benefit.--The credit otherwise determined 
under section 45D (and the credit otherwise allowed under section 25D 
by reason of section 48D(e)), determined without regard to this 
subsection, shall be reduced by the amount of the portion of such 
credits with respect to which the taxpayer makes the election under 
subsection (a).''.
    (c) Conforming Amendments.--
            (1) Section 46 of such Code is amended by striking ``and'' 
        at the end of paragraph (5), by striking the period at the end 
        of paragraph (6) and inserting ``, and'', and by adding at the 
        end the following new paragraph:
            ``(7) the microgrid property credit.''.
            (2) Section 49(a)(1)(C) of such Code is amended by striking 
        ``and'' at the end of clause (iv), by striking the period at 
        the end of clause (v) and inserting a comma, and by adding at 
        the end the following new clause:
                            ``(vi) the basis of any qualified microgrid 
                        property under section 48D.''.
            (3) Section 50(a)(2)(E) of such Code is amended by striking 
        ``or 48C(b)(2)'' and inserting ``48C(b)(2), or 48D(d)(1)''.
            (4) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 48C the following new item:

``Sec. 48D. Microgrid property.''.
            (5) The table of sections for subchapter B of chapter 65 of 
        such Code is amended by adding at the end the following new 
        item:

``Sec. 6431. Elective payment of microgrid property credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2020, under rules similar to the 
rules of section 48(m) (as in effect on the day before the date of the 
enactment of the Revenue Reconciliation Act of 1990).
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