S. 1845 – Reading Mode

112th CONGRESS

1st Session

S. 1845

IN THE SENATE OF THE UNITED STATES

November 10, 2011

Mr. Wyden (for himself, Mr. Bingaman, and Ms. Collins) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to provide for an energy investment credit for energy storage property connected to the grid, and for other purposes.

Short title

This Act may be cited as the Storage Technology for Renewable and Green Energy Act of 2011 or the STORAGE 2011 Act.

Energy investment credit for energy storage property connected to the grid

(a)

Up to 20 percent credit allowed

Subparagraph (A) of section 48(a)(2) of the Internal Revenue Code of 1986 is amended—

(1)

by striking and at the end of subclause (IV) of clause (i),

(2)

by striking clause (i) in clause (ii) and inserting clause (i) or (ii),

(3)

by redesignating clause (ii) as clause (iii), and

(4)

by inserting after clause (i) the following new clause:

(ii)

as provided in subsection (c)(5)(D), up to 20 percent in the case of qualified energy storage property, and

(b)

Qualified energy storage property

Subsection (c) of section 48 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(5)

Qualified energy storage property

(A)

In general

The term qualified energy storage property means property—

(i)

which is directly connected to the electrical grid, and

(ii)

which is designed to receive electrical energy, to store such energy, and—

(I)

to convert such energy to electricity and deliver such electricity for sale, or

(II)

to use such energy to provide improved reliability or economic benefits to the grid.

Such term may include hydroelectric pumped storage and compressed air energy storage, regenerative fuel cells, batteries, superconducting magnetic energy storage, flywheels, thermal energy storage systems, and hydrogen storage, or combination thereof, or any other technologies as the Secretary, in consultation with the Secretary of Energy, shall determine.

(B)

Minimum capacity

The term qualified energy storage property shall not include any property unless such property in aggregate has the ability to sustain a power rating of at least 1 megawatt for a minimum of 1 hour.

(C)

Electrical grid

The term electrical grid means the system of generators, transmission lines, and distribution facilities which—

(i)

are under the jurisdiction of the Federal Energy Regulatory Commission or State public utility commissions, or

(ii)

are owned by—

(I)

the Federal government,

(II)

a State or any political subdivision of a State,

(III)

an electric cooperative that is eligible for financing under the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.), or

(IV)

any agency, authority, or instrumentality of any one or more of the entities described in subclause (I) or (II), or any corporation which is wholly owned, directly or indirectly, by any one or more of such entities.

(D)

Allocation of credits

(i)

In general

In the case of qualified energy storage property placed in service during the taxable year, the credit otherwise determined under subsection (a) for such year with respect to such property shall not exceed the amount allocated to such project under clause (ii).

(ii)

National limitation and allocation

There is a qualified energy storage property investment credit limitation of $1,500,000,000. Such limitation shall be allocated by the Secretary among qualified energy storage property projects selected by the Secretary, in consultation with the Secretary of Energy, for taxable years beginning after the date of the enactment of the STORAGE 2011 Act, except that not more than $40,000,000 shall be allocated to any project for all such taxable years.

(iii)

Selection criteria

In making allocations under clause (ii), the Secretary, in consultation with the Secretary of Energy, shall select only those projects which have a reasonable expectation of commercial viability, select projects representing a variety of technologies, applications, and project sizes, and give priority to projects which—

(I)

provide the greatest increase in reliability or the greatest economic benefit,

(II)

enable the greatest improvement in integration of renewable resources into the grid, or

(III)

enable the greatest increase in efficiency in operation of the grid.

(iv)

Deadlines

(I)

In general

If a project which receives an allocation under clause (ii) is not placed in service within 2 years after the date of such allocation, such allocation shall be invalid.

(II)

Special rule for hydroelectric pumped storage

Notwithstanding subclause (I), in the case of a hydroelectric pumped storage project, if such project has not received such permits or licenses as are determined necessary by the Secretary, in consultation with the Secretary of Energy, within 3 years after the date of such allocation, begun construction within 5 years after the date of such allocation, and been placed in service within 8 years after the date of such allocation, such allocation shall be invalid.

(III)

Special rule for compressed air energy storage

Notwithstanding subclause (I), in the case of a compressed air energy storage project, if such project has not begun construction within 3 years after the date of the allocation and been placed in service within 5 years after the date of such allocation, such allocation shall be invalid.

(IV)

Exceptions

The Secretary may extend the 2-year period in subclause (I) or the periods described in subclauses (II) and (III) on a project-by-project basis if the Secretary, in consultation with the Secretary of Energy, determines that there has been a good faith effort to begin construction or to place the project in service, whichever is applicable, and that any delay is caused by factors not in the taxpayer's control.

(E)

Review and redistribution

(i)

Review

Not later than 4 years after the date of the enactment of the STORAGE 2011 Act, the Secretary shall review the credits allocated under subparagraph (D) as of the date of such review.

(ii)

Redistribution

Upon the review described in clause (i), the Secretary may reallocate credits allocated under subparagraph (D) if the Secretary determines that—

(I)

there is an insufficient quantity of qualifying applications for certification pending at the time of the review, or

(II)

any allocation made under subparagraph (D)(ii) has been revoked pursuant to subparagraph (D)(iv) because the project subject to such allocation has been delayed.

(F)

Disclosure of allocations

The Secretary shall, upon making an allocation under subparagraph (D)(ii), publicly disclose the identity of the applicant, the location of the project, and the amount of the credit with respect to such applicant.

(G)

Termination

No credit shall be allocated under subparagraph (D) for any period ending after December 31, 2020.

(c)

Effective date

The amendments made by this section shall apply to periods after the date of the enactment of this Act, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

Energy storage property connected to the grid eligible for new clean renewable energy bonds

(a)

In general

Paragraph (1) of section 54C(d) of the Internal Revenue Code of 1986 is amended to read as follows:

(1)

Qualified renewable energy facility

The term qualified renewable energy facility means a facility which is—

(A)

(i)

a qualified facility (as determined under section 45(d) without regard to paragraphs (8) and (10) thereof and to any placed in service date), or

(ii)

a qualified energy storage property (as defined in section 48(c)(5)), and

(B)

owned by a public power provider, a governmental body, or a cooperative electric company.

(b)

Effective date

The amendment made by this section shall apply to obligations issued after the date of the enactment of this Act.

Energy investment credit for onsite energy storage

(a)

Credit allowed

Clause (i) of section 48(a)(2)(A) of the Internal Revenue Code of 1986, as amended by this Act, is amended—

(1)

by striking and at the end of subclause (III),

(2)

by inserting and at the end of subclause (IV), and

(3)

by adding at the end the following new subclause:

(V)

qualified onsite energy storage property,

(b)

Qualified onsite energy storage property

Subsection (c) of section 48 of the Internal Revenue Code of 1986, as amended by this Act, is amended by adding at the end the following new paragraph:

(6)

Qualified onsite energy storage property

(A)

In general

The term qualified onsite energy storage property means property which—

(i)

provides supplemental energy to reduce peak energy requirements primarily on the same site where the property is located, or

(ii)

is designed and used primarily to receive and store, firm, or shape variable renewable or off-peak energy and to deliver such energy primarily for onsite consumption.

Such term may include thermal energy storage systems and property used to charge plug-in and hybrid electric vehicles if such property or vehicles are equipped with smart grid equipment or services which control time-of-day charging and discharging of such vehicles. Such term shall not include any property for which any other credit is allowed under this chapter.

(B)

Minimum capacity

The term qualified onsite energy storage property shall not include any property unless such property in aggregate—

(i)

has the ability to store the energy equivalent of at least 20 kilowatt hours of energy, and

(ii)

has the ability to have an output of the energy equivalent of 4 kilowatts of electricity for a period of 5 hours.

(C)

Limitation

In the case of qualified onsite energy storage property placed in service during the taxable year, the credit otherwise determined under subsection (a) for such year with respect to such property shall not exceed $1,000,000.

(c)

Effective date

Credit for residential energy storage equipment

(a)

Credit allowed

Subsection (a) of section 25D of the Internal Revenue Code of 1986 is amended—

(1)

by striking and at the end of paragraph (4),

(2)

by striking the period at the end of paragraph (5) and inserting , and, and

(3)

by adding at the end the following new paragraph:

(6)

30 percent of the qualified residential energy storage equipment expenditures made by the taxpayer during such taxable year, and

(b)

Qualified residential energy storage equipment expenditures

Section 25D(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:—

(6)

Qualified residential energy storage equipment expenditures

For purposes of this section, the term qualified residential energy storage equipment expenditure means an expenditure for property—

(A)

which is installed in or on a dwelling unit located in the United States and owned and used by the taxpayer as the taxpayer's principal residence (within the meaning of section 121), or on property owned by the taxpayer on which such a dwelling unit is located,

(B)

which—

(i)

provides supplemental energy to reduce peak energy requirements primarily on the same site where the property is located, or

(ii)

is designed and used primarily to receive and store, firm, or shape variable renewable or off-peak energy and to deliver such energy primarily for onsite consumption, and

(C)

which—

(i)

has the ability to store the energy equivalent of at least 2 kilowatt hours of energy, and

(ii)

has the ability to have an output of the energy equivalent of 500 watts of electricity for a period of 4 hours.

(c)

Effective date

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.