Boaz Augustin Madurai | Tax intensives for Battery Energy Storage System

Boaz Augustin Madurai
3 min readOct 7, 2020


Energy storage has become a hot topic gaining much public attention in recent years for many reasons. Solar energy is dependent on sunlight, and likewise, wind energy harness the power of the wind. In the case where these are absent, energy storage solutions such as batteries are required to ensure a steady flow of power and continuous supply during peak times. Hence, battery energy storage becomes an indispensable component of sustainability. Now, the government spurred tax incentives to encourage the deployment of energy storage systems. This is especially when it is being leveraged for solar facilities. If you are a homeowner considering solar energy, this could be the time to embrace the clean energy and include energy storage in your installation. The good thing is, you get to benefit from the tax incentives for the solar panel system with the installation of battery storage. Read more on these tax incentives as Boaz Augustin Madurai, a solar energy expert and entrepreneur explores more on tax incentives for battery energy storage systems in solar energy.

What is the Federal tax incentives for energy storage systems?

The tax credits for solar systems are one of the most important that has gained the attention of the government and bring about federal policy. The aim is to support the growth of solar energy in the United States. It turns out to be a huge success as the solar investment tax credit (ITC) rise by more than 10,000% after the ITC was enacted in 2006 and contributed to a better economy. The benefits of solar energy installments extend towards its battery system and both residential and commercial making use of the solar system together with solar batteries qualify for ITC as long as it is solar generation. This is to say the solar energy system together with the battery storage has to belong to the same owner, be installed at the same time, be on the same location, and are under the same take-off agreements.

What is the time frame of ITC?

Unfortunately, the ITC value credits diminish over the years. As of 2020, the deduction from taxable income at dollar for dollar is at 26 percent and will continue to decline in recent years. Hence, as a homeowner or a business owner interested in the solar system and its storage, there is no perfect time than now to get them installed.

2020: 26 percent federal income tax deductions.

2021: 22 percent of federal income tax deductions.

2022 and beyond: federal income tax deductions drop to zero fro residential while the commercial credit drops to a permanent 10 percent.

How do solar investment tax incentives work with energy storage?

As said earlier, the ITC is available when as a homeowner you own the solar system and have them installed in your home. For businesses, if you install, develop, or finance the construction of the project, you can as well claim the credit. Here, Boaz Augustin Madurai explains the factors that come into play before you can avail of the tax incentives:

Residential properties

If you are a homeowner and already installed the solar panels, you are eligible for tax incentives. Now, the question is, is the battery energy storage included in the tax credit? The answer is yes- on the basis that it derives its power from an onsite solar system. This means only your solar energy system must charge the battery storage and any other means of power supply such as electricity or more than 25% from the grid is not qualified.

Commercial properties

If the installation is for commercial purposes, you can only avail of the incentive if 75% of charging is from solar generation. This will be calculated on the basis of how much the battery is charged with the renewable system.


Since the inception of ITC, the adoption of solar energy and the storage system has been on an all-time high generating thousands of jobs, boosting the economy, and contributing to cleaner energy. For this, advocates are looking to extend its value at 30% and beyond 2025 and crate distinct tax credits for battery storage system alone so that those with solar batteries installations alone can also qualify.

Originally published at on October 7, 2020.



Boaz Augustin Madurai

Boaz Augustin Madurai, an entrepreneur and Co-founding father of Borg Energy India based in Chennai, India. He has completed his Engineering from Anna Universit