The Internal Revenue Service has indicated that federal solar tax credits extend to battery systems added as retrofits — a policy that could “open the floodgates” for residential solar installers eager to add energy storage to their mass-market offerings.

That’s how GTM Research analyst Brett Simon summed up a letter from the IRS, released Friday (PDF), in reply to a query from an unnamed married couple. They claimed a federal Investment Tax Credit (ITC) for a battery, inverter, wiring and software they added to their existing rooftop PV system, set up so that it will only store energy from the solar panels, and otherwise be available day or night to respond to power outages or to reduce overall load.

The letter finds that, under these operating restrictions, the entire cost of the retrofit is subject to the 30 percent tax credit — as long as it only charges from the sun. Specifically, the letter states that the investment “meets the definition of a ‘qualified solar electric property expenditure’ under § 25D(d)(2) of the Code, and therefore, you may claim a tax credit on this Battery.”

It’s important to note that this letter concludes with a statement that it’s directed “only to the taxpayer who requested it,” and that “Section 6110(k)(3) of the Code provides it may not be used or cited as precedent.” It also notes that it hasn’t investigated the couple’s system logs or other records to see that it’s operating in 100 percent solar charging mode.

Still, for an industry hungry for some guidance on what could be a hot new market opportunity, Friday’s letter adds an important new piece to the record of such so-called “private letter” rulings, said Simon. Previous private letters have led to the legal understanding that new solar-storage systems were eligible for the ITC, but Friday’s letter is the first to specifically address retrofits.

“It’s just a single case,” he said, “but is nevertheless important because it reveals how the IRS views retrofits, and could lead to a future guidance that allows for all retrofits of storage to take the ITC. If that happened, the floodgates would open.”

Siemens Gamesa, the world’s largest wind turbine manufacturer, is boosting its focus on energy storage technology, the latest sign of the growing importance of batteries to extending the reach of wind and solar power.

Chief executive Markus Tacke said his aim was to make renewable energy sources available on demand, even when the wind was not blowing and the sun was not shining.

“The missing part is storage,” he said in an interview with the Financial Times. “To unlock the potential growth limitations, that is the piece of technology that needs to be developed.”

Mr Tacke pointed out that as the cost of wind turbines has come down, it made sense to pair them with solar or storage to create a more consistent source of power. He said Siemens Gamesa was increasing its investment in storage technology.

As part of its push, Siemens Gamesa has invested more in batteries and other types of energy storage, including a hot rock plant (where surplus power is retained by heating rocks) that helps provide power for an aluminium smelter in Hamburg.

The company is also testing a vanadium redox-flow battery system — a niche technology that some people believe could eventually rival lithium-ion batteries for energy storage — at a research facility in Spain.

Siemens Gamesa had a difficult first year after it was created from the merger of Siemens’ wind turbine business with Gamesa, the Spanish turbine maker, and its share price has fallen by almost a third since the deal was completed last April.

Mr Tacke, who had been head of Siemens’ wind business, became chief executive of the new company when the merger was completed.

Technology to design and use batteries to store electricity harnessed from solar panels has received substantial interest recently. Companies like Tesla and Daimler already have a foot in the door with battery technology and recently, Japanese automaker Nissan has announced that it will soon join the duo. These companies have previously used battery tech to power their electric vehicles, some of which also come with integrated solar panels built into the roof.

The Japanese carmaker’s new venture will be called Nissan Energy Solar. This wing of the company will be dedicated towards sales of solar panels and energy storing battery packs and developing a consumer base for the same. The stationary battery packs which were developed by Nissan were first showcased in 2016.

These energy storage battery-packs are now available to the customers and are ready to go on sale. The company is limiting the sales of this product to the U.K market. The Japanese car maker, however, has shown interest in expansion to other European companies in the future.

Effective storage of energy has been a crucial hurdle for the practicality of renewable energy incorporation. In this scenario, solar energy can be effectively stored in these specially designed stationary battery packs. On a regular day, the solar panels produce energy which is several times more than the energy consumption needs of a regular household for a single day.

This energy can be stored overnight and be used on the days when the climatic conditions obstruct Sun from Shining as brightly, which would impair the panels from harnessing similar levels of energy. This technology will also give homeowners the option of selling the excess energy they have stored in the battery packs and continue to run and power their household efficiently.

In the automotive field, the power generation and storage capabilities of the solar panels and stationary battery packs will redefine green cars into their most quintessential form. This will be done by substantially reducing the carbon footprint of the energy source which produces electricity that charges these electric vehicles.

Last week I happened to catch an intriguing documentary on NOVA called Search for the Super Battery.

The topic is of intense interest to me, as the development of better, cheaper batteries is critical for both the future of electric vehicles (EVs) and for the future electrical grid. Battery improvements are needed to increase the range of EVs, and cheaper batteries can help drive down the costs of EVs so more consumers can afford them.

For the electrical grid, increased penetration of renewables poses some challenges because of their intermittent nature. Since the wind could stop blowing at any time, and the sun’s radiation can only be captured during the day, these sources of power need to be backed up. Cost-effective storage of power could enable essentially unlimited penetration of renewables into the grid.

Thus, tremendous effort has gone into battery development in recent years. The effort is paying off, with prices for battery cells falling by 70 percent between 2012 and 2017, according to PV Magazine. But costs need to continue to decline to make widespread use of utility-scale battery storage a reality.

Lithium-ion batteries have become the battery of choice in many consumer electronics such as laptops, and in electric vehicles such as those produced by Tesla. But there are a couple of problems with these types of batteries that need to be resolved.

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For reasons that are explained in the documentary, the use of lithium-metal electrodes enables a greater energy density than conventional lithium-ion batteries. But lithium-metal electrodes can develop finger-like structures called dendrites that will eventually short-circuit the battery.

The solution to this problem was to replace the lithium-metal electrode with a carbon electrode with a lattice structure that houses lithium ions. Thus, the lithium-ion battery was born, albeit with a lower energy storage capacity than a battery utilizing a solid lithium-metal electrode.

Lithium-ion batteries also suffer from one other shortcoming that has been the subject of numerous news articles. If these batteries are damaged, they can explode or catch fire. This has happened in laptops, cell phones, and EVs. If damaged, all of the energy stored inside the battery can release over a short period of time, and the result can be a hot, intense fire.

Dutch energy solutions company Alfen is supplying an integrated energy storage solution to enable electric vehicle charging for carmaker BMW.

The 1.1 MW system will be installed at BMW’s test location in Munich, Germany, and will incorporate an ultrafast charger for BMW Group’s EV prototypes.

The system is based on 34 BMW i3 car batteries and ensures maximum available power for the charging of EVs, irrespective of the capacity of the local power grid.

Alfen said: “One of the benefits of BMW i batteries is that these make the system transportable. This provides optimal flexibility to relocate the system to other locations in the future, wherever a backup for fast-charging of EVs might make sense. This addresses the increasingly imminent problem of concentrated fast charging of EVs in relation to the available grid capacity.”

Alfen has also signed an agreement with BMW to purchase the i3 car batteries for other storage projects.

Andreas Plenk, Global Sales Director for Energy Storage at Alfen, said: “We have been working with BMW i batteries at multiple storage projects, but are very proud to be selected to provide a storage system for one of BMW AG’s locations in Munich.

“As the energy transition evolves, we see more and more of our clients being interested in our integrated energy solutions capabilities, in which we combine our expertise in smart grids, EV charging and energy storage. We look forward to address the energy challenges of our clients.”

The UK government’s head of smart energy has admitted that Brexit – Britain’s planned departure from the European Union – is causing delays in the passage of primary legislation to define energy storage, which may not be achieved until 2022.

Speaking at yesterday’s Utility Week Live event in Birmingham, England, Will Broad was providing an update on the progress of the Smart Systems and Flexibility Plan (SSFP), which was published in July 2017, outlining 29 actions to enable the future energy system of the UK.

The plan set about to amend the Electricity Act 1989 and other relevant legislation to explicitly define electricity storage as a distinct subset of generation.

This was in opposition to many voices from industry that claimed energy storage should not be continually defined as a form of generation owing to its unique capabilities within the energy system.

Broad yesterday conceded that the vote to leave the European Union, and the associated legislative requirements, meant that time could not be secured within government to move forward on the issue.

“We’re still seeking opportunities for parliamentary time to define storage in primary legislation and Brexit is making this difficult. But we still commit to do it this Parliament,” he said.

The original Call For Evidence in November 2016, which resulted in the actions outlined in the SSFP, made clear the industry’s appetite for a bespoke definition of energy storage.

It was argued that the current generation class assigned to the technology has led to a series of barriers to deployment, such as double charging of final consumption levies at the time of both importing from and exporting electricity to the grid.

This has left developers clamouring for faster progress on the issue, with an audience member at yesterday’s event accusing Broad of using Brexit “as an excuse” for delays.

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The U.S. federal government is one of the nation’s largest energy consumers, and has been a primary customer of Ameresco since the company’s inception. They are natural partners, according to Bulgarino, because the federal government is a leader in incorporating and installing innovative technologies — the kind of products that differentiate Ameresco.

Ameresco has done billions of dollars of energy work with the U.S. government, mostly through performance contracting, through which the company guarantees energy performance and savings.

“The government doesn’t have to outlay capital, and that has been very key for them, obviously, through budget shortfalls over many years,” Bulgarino said.

Ameresco’a federal clients range from the General Service Administration (GSA) and Department of Defense to Army and Navy, and Marine bases, to the Veterans Administration, the U.S. Department of Agriculture and the Bureau of Prisons.

The federal sector pursues microgrids and distributed energy with a key objective — energy resiliency.

“Yes, there is definitely interest in resiliency, resiliency being their ability to maintain operations amid challenging events or unplanned events,” she said.

Concerns about cybersecurity drive government interest in energy resiliency, as does extreme weather, natural disasters, and the problem of aging infrastructure.

In fact, a recent Ameresco project  — a new energy system at the Marine Corp.’s Parris Island in South Carolina — arose out of these concerns. Parris Island is the Marine Corp.’s primary training base for new recruits.

Being on an island makes the base more vulnerable to utility failures from hurricanes and flooding.

Hybrid projects that are a combination of wind energy, solar PV, and other energy sources, are becoming a more and more attractive option to drive the energy transition to higher shares of renewable energy in the mix. Siemens Gamesa is one of the pioneers in this development with a long-term track record in hybridization and off-grid technology.

Now the company has taken another step and is testing a battery storage technology with large future potential.

At SGRE’s La Plana R&D site near Zaragoza, Spain, a redox-flow energy storage system has been commissioned. The system is connected to the hybrid controller of the combined wind and PV generation system and supplements the lithium-ion batteries that have been in use here for around two years.

The La Plana test-site integrates the next-generation Vanadium redox energy storage system with a wind turbine, solar-PV modules, and a diesel generator. The new redox flow battery offers a 120-kW energy output with a storage capacity of 400kWh. Siemens Gamesa has been refining its knowledge in hybridization over years.

A sophisticated flexible hybrid controller is the resulting product of this R&D effort. It is the digital core that coordinates the generation of all energy sources to meet the electrical load, in order to reduce the LCoE of the plant regardless of whether the grid is connected or disconnected. To reduce energy costs the controller is targeting to achieve the maximum integration of renewable energy.