2022-Aug-16 - Huge Federal Tax Law Changes - related to Batteries AND Solar (both used in residences)

[E. Bryan Hoover]

On 2022-Aug-16th President Biden Signed into Law a Pub Law 117-169
After it was passed by the US Senate and the US House
This was mostly a Green Energy Law - even though it is titled
an Inflation Reduction Law AND the media called it a (phoney?) Inflation Reduction Law

The purpose of this post is to bring to your attention what "appears" to be:

Major - positive - changes to the Federal Tax incentives for:
Solar Power (residential) AND Large Batteries (residential)

It "Appears" both these changes are retroactive to 2022-Jan-01

The Large Batteries changes appear to be limited to batteries
with a named plate rating of greater than 5KW (5,000 kilo-Watts)
It appears the non-refundable credit is 30%.
AND it also appears that the batteries do not, Repeat NOT.
need to be related to solar - they can be stand alone residential - AND -
AGAIN it appears to be retroactive to 2022-Jan-1st.

The solar (residential) non-refundable tax credit is raised back up to
a 30% (non-refundable) tax credit - retroactive to 2022-Jan-1st for 10 years.

Again, these credits appear to be non-refundable.
Which means, unless you are rich, you will have to do some tax planning
to take (full OR even any) advantage of them this year OR future years.

There are some credits that are refundable AND available to middle income folks:
The $1,700 federal rebate for hot water heat pump water heaters is one.
This rebate pays the cost of all (or almost all) of the equipment cost
of hot water heat pumps.
(I am looking at a Rheem full 15 AMP 110 volt - hot water tank heat pump).
Many other things are included in this rebate program - but ...
There are many, many cooks in the kitchen for these rebate programs:
The programs are established by state regulation in each of the fifty states PLUS
regulators in one of the federal departments ( the Energy Department maybe )
as well as the US Congress (the Feds are providing the money through the states)
and (perhaps) even an executive order of President Biden.

DISCLAMER - I am not a tax professional or a lawyer -
- this information is provided so you can do your own research AND/OR
seek the assistance of professionals.

At this point I am just starting to look into it -
AND I would NOT even act on my own research at this point.

For anyone doing their own research - as of now -
the US Government Printing Office has not even published
Public Law 117-169 EVEN THOUGH they have already published
Public Laws 117-170, 117-171, 117-172 etc.

The law was amended by the house through reconciliation AND
the house changes were approved by the Senate AND
signed by the President - but - apparently no one has
applied the house changes to the Public Law yet - it is a hot mess.

But - again - it appears to represent 30% of large residential batteries AND
AND 30% of residential Solar ( both OFF Grid or Grid TIED or both) AND
AND it appears to be retroactive to 2022 Jan 1st.

 

[Browse]

Where does it say the stand alone (non-solar) 30% battery rebate is retroactive to 2022?

 

[Leeds]

The last thread like this one went off the rails really, really quickly.

In the hopes of keeping this one grounded in reality here is the text of the law in question (which has been signed and enacted):

https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf

Here is the clean energy credit law that was modified by the above law. This is the current, (signed and enacted) version:

http://uscode.house.gov/view.xhtml?req=(title:26%20section:25D%20edition:prelim)

Here is the text of the text of the battery stuff:

(6) Qualified battery storage technology expenditure​

The term "qualified battery storage technology expenditure" means an expenditure for battery storage technology which-

(A) is installed 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.

 

[dr.diesel]

How soon till battery manufactures raise their pricing 30%?

 

[Browse]

As far as I can tell, the stand-alone 30% battery credit doesn't apply until 2023:

Statutory Notes and Related Subsidiaries​

Effective Date of 2022 Amendment​

Pub. L. 117–169, title I, §13302(d), Aug. 16, 2022, 136 Stat. 1947 , provided that:

"(1) In general.-Except as provided in paragraph (2), the amendments made by this section [amending this section] shall apply to expenditures made after December 31, 2021.

"(2) Residential clean energy credit for battery storage technology; certain expenditures disallowed.-The amendments made by subsection (b) [amending this section] shall apply to expenditures made after December 31, 2022."


Link:

https://uscode.house.gov/view.xhtml;jsessionid=F5C32189149CBFDE3BDEE26580B68892?req=17+U.S.C.+107&fq=true&num=2785&hl=true&edition=prelim&granuleId=USC-prelim-title19-section2#effectivedate-amendment-note

 

[Browse]

See also (D) Effective Dates (2):

https://uscode.house.gov/statviewer.htm?volume=136&page=1947

 

[Leeds]

I'm excited that this battery credit is based on size and not usage. The way I read it I can still design a completely non-grid tied secondary system at home and get $ back for the batteries.

If they forced it to be part of a grid tied system it would be a much harder sell for me.

 

[GVSolar]

Since there are two opinions expressed herein as to an effective purchase date - are there any savvy tax/accounting people with an opinion as to whether a 5.1kwh battery purchase in 2022 would qualify for the 30% tax credit? Thanks.

 

[timselectric]

Since there are two opinions expressed herein as to an effective purchase date - are there any savvy tax/accounting people with an opinion as to whether a 5.1kwh battery purchase in 2022 would qualify for the 30% tax credit? Thanks.

According to the post above.
Yes, if part of a solar system.
Not until 2023, if stand alone.

 

[...]

.

 

[Ampster]

Yes, if part of a solar system.

I take that to mean that it must be charged by a solar system. That was the old rule at least.

 

[timselectric]

I take that to mean that it must be charged by a solar system. That was the old rule at least.

Until 2023, it would appear so.

 

[Ampster]

If they forced it to be part of a grid tied system it would be a much harder sell for me.

I guess it would depend on where you are. I am in California and my least expensive rate is $0.23 per kWh and I can produce solar at a cost of $0.08 per kWh so I charge my storage from solar and still have plenty to charge my EVs and sell some to the grid.

 

[timselectric]

That would definitely cost some votes.
Grid-tied is getting phased out. It wouldn't be wise for the government to steer anyone in that direction.

 

[joeshmoe]

Mmm. More gov't subsidy. Just what we need.

 

[michael d]

the greedy corporate electric monopolies buy their way to get what they want.... that is why they are phasing out grid tie subsidies....
how much do they pad their CEO,s pay (fat cats) etc to increase the expenses?? not in favor of the consumer I assure you....
the federal government subsidizes the electric monopolies...

I am off the electric grid in south dakota with all my PV solar electric builds, where there is absolutely no grid tie incentives...??

inflation reduction act >>>> ha ha