Maryland Legislature passes first of its kind storage tax credit

[Updated 5/10/2017)]

Maryland may soon boast the country’s first energy storage tax credit. The bill (SB0758 and HB0490) passed at the close of the 2017 Maryland Legislative session by wide margins. The governor approved the bill on May 4. This new tax credit could help to make Maryland a leader in distributed storage across the country.

What’s in the law?

The law offers a state income tax credit for commercial and residential storage projects on a first come, first serve basis. The Maryland Energy Administration will issue tax credit certificates with a maximum program-wide allocation of $750,000 per year for projects installed starting after January 1, 2018 and before December 31, 2022. The maximum allocation of credit per project is 30% for the total installed cost for the energy storage system with a cap of $5,000 for residential systems and $75,000 for commercial systems.

Eligible energy storage systems are defined in the law as any “system used to storage electrical energy, or mechanical, chemical, or thermal energy that was once electrical energy, for use as electrical energy at a later date or in a process that offsets electricity use at peak times”. This means that the credit will support a wide variety of technologies, from traditional sealed lead-acid battery systems that have been around for decades to new lithium-ion batteries like the Tesla Powerwall and other offerings. It also supports non-electrical storage methods like compressed air storage and pumped water storage.

What can you do with storage anyway?

Storage provides electricity when the electric grid goes down through technologies like battery backup systems. These devices also offer what are called “ancillary services” to the electric grid. These services are currently offered at larger scales by third party providers who are compensated to provide help to the utility company at key moments to maintain the grid within the required ranges for system voltage and frequency.

Our electric grid is transforming. More distributed, renewable, and resilient energy resources are coming online. Utility grid operators, energy producers, and energy service providers will all need to coordinate to ensure that the grid continues to provide reliable electricity service. This means the value of distributed storage will continue to grow.

What does this have to do with solar?

Solar and storage is an ideal combination. Solar charges the storage at a fixed cost and keeps it ready for action when the grid is operating. If the grid goes down, energy storage takes over to provide energy. This could be for a home, a business, or a critical location in the community like a hospital, shelter, or community center. Larger storage installations can also provide other services to the grid and be paid for doing so. In the future, when smaller providers like homeowners are allowed to participate, they could too.