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Can you claim “after-install” batteries on your taxes?

Can you claim “after-install” batteries on your taxes?

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Good News for the Future of Energy Storage

Here’s some news that’s sure to charge you up…

The IRS recently ruled that—for one couple who had purchased solar, at least—a retrofitted battery system qualified for federal solar tax credits.

Here’s the backstory…

The couple had been challenged when they tried to claim the Solar Investment Tax Credit (ITC) on the cost of their energy storage.

Now as you may or may not know, batteries purchased at the same time as a solar energy system have been eligible for the tax credit since a ruling was made in 2013.

So, this couple reasoned, the battery they purchased a year after their system should also be eligible for the same ITC.

The IRS disagreed, but this couple wouldn’t take “no” for an answer. And on March 2 of this year—if you’ll forgive the pun—the taxman saw the light.

The IRS told them that the battery they added to their existing system DID qualify for a 30% tax credit—in part because solar power is the ONLY way to recharge the particular battery they had installed.

The battery was JLM Energy’s Phazr. The Phazr is installed between the solar panel and inverter, making it impossible to be charged by an outside source like the utility grid. It charges on solar power and stores energy during the day, then puts powerback into the grid at night. It’s easy to retrofit to existing systems—say, for example, if your usage changes or your utility rates go up. So it’s becoming quite a popular choice for solar energy system owners.

That the IRS gave the Phazr the nod is good news for both installers and consumers.

Utilities are starting to change the way they bill customers—and these changes (invariably) reduce the value that they credit for solar energy. Peak rates shifting to night-time when you have to draw power from the grid… Credits being lowered for adding energy to the grid during the day… We’ve heard it all.

In other words, consumers are getting hit twice.

But energy storage is the solution to future-proofing a system from these changes.

Which means if batteries become eligible for tax credits, homeowners will be happy. Installers will be happy, too, because consumers will buy more batteries.

Progress is Good, but Policy is Better

Now before you get too excited, you should know this: the couple received this decision from the IRS in what’s called a “private-letter ruling” that’s ONLY applicable to them.

In other words, for the time being, only this particular couple gets to claim a credit.

But solar industry analysts are still excited, for the simple fact that this ruling represents progress.

It may also indicate that the IRS might make this kind of approval into policy in the future.

And that means that—someday—everyone will enjoy the tax credit on after-install batteries.

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