There remains some uncertainty around how the ITC or the solar tax credit works with solar battery backup systems in New Jersey and across the USA. The Internal Revenue Service specified that the federal solar tax credits cover battery systems, which are deemed as retrofits.
IRS’s policy serves to open the floodgates that will allow residential solar installers to include energy storage in their offerings. After all, many homeowners will be eager to install solar panel systems into their home knowing that the IRS ruling allows them to enjoy 30% energy tax credit using solar power.
More specifically, homeowners that use batteries to store solar electricity can qualify for IRC’s 30% tax credit for energy consumption. What most people know is that taxpayers with installed and mounted solar panels systems can enjoy the solar tax credit.
A typical system includes include the set of solar PV panels, which are mounted on a building’s roof. It also includes wiring as well as an inverter for converting the electricity derived from solar power from AC to DC. However, many taxpayers today also include batteries in their solar panel systems.
Using these batteries, the taxpayer can store electricity from the grid and the PV system even during off-peak hours. Through the batteries, the taxpayer can use electricity during peak hours or supply the electricity back to the grid.
Does the IRS Ruling Include the Batteries?
Many taxpayers wonder if the batteries are also solar energy property. According to the IRS, it is. It means that they can take advantage of the 30% tax credit for every battery. However, the owner can claim a full solar credit off of their solar battery backup system if it derives 100% power from solar.
Based on the ruling of IRS, a commercial solar energy system with a battery backup system only needs around 75% energy from storage. The solar battery backup NJ plays an essential role in a solar panel system.
It serves as the first stop of the solar energy when it comes off the roof from a residential solar energy system. What it means is that as long as you keep the solar on, effectively producing power, then it will always make sure that the battery is the first thing charged.
You need the batteries charged for use during off-peak hours. The IRS ruling has a bit of confusion in the use of solar batteries. The confusion stems from how the batteries could pull from the grid for charging when it experiences reduction during night time.
According to IRS’s ruling, the battery can have the 30% solar tax credit if it draws power from solar 100%. However, it contradicts the 1964 ruling, which states that solar battery backup NJ can claim a full tax credit. This ruling hasn’t been repelled when tax laws were updated in 1993.
The IRS, however, is clear on saying that the solar battery backup has to draw electricity completely from solar. For this reason, a solar panel project owner should check with their accountant before claiming the solar tax credit.