Residential energy storage

AN ACT Relating to incentivizing grid-connected residential 1
battery energy storage systems; adding new sections to chapter 82.16 2
RCW; creating a new section; and providing an expiration date.3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
NEW SECTION. Sec. 1. The legislature finds that it is in the 5
public interest to increase energy storage capacity across the state 6
in response to increases in peak electrical loads, wildfire 7
potential, and windstorms and other catastrophic events that may lead 8
to power outages. Residential battery energy storage systems will be 9
a key part of the solution, but they must be connected to the grid 10
and dispatchable by utilities during peak load events, and available 11
to customers in the case of power outages. The initial cost of 12
residential battery energy storage systems is a barrier for many 13
light and power business customers. With a targeted incentive 14
program, the state can aid utilities and their customers in the 15
adoption of these systems with the goal of reducing costly 16
transmission and distribution of capital expenditures; maximizing 17
system benefits for all retail electric customers; and identifying 18
opportunities for improving access to transformative technologies for 19
low-income and moderate-income customers. Such incentive programs 20
would help achieve clean energy transformation act goals.21
H-0758.3
HOUSE BILL 1871
State of Washington 69th Legislature 2025 Regular Session
By Representatives Hunt, Klicker, Doglio, Parshley, Ramel, Zahn, and
Duerr
Read first time 02/06/25. Referred to Committee on Environment &
Energy.
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NEW SECTION. Sec. 2. A new section is added to chapter 82.16 1
RCW to read as follows: 2
The definitions in this section apply throughout this section and 3
sections 3 through 6 of this act unless the context clearly requires 4
otherwise. 5
(1) "Distributed energy resource" has the same meaning as in RCW 6
19.405.020. 7
(2) "Low-income" has the same definition as in RCW 19.405.020.8
(3) "Moderate-income household" means a single person, family, or 9
unrelated persons living together whose adjusted income is more than 10
80 percent but is at or below 115 percent of the median family income 11
adjusted for family size, for the county, city, or metropolitan 12
statistical area, where the project is located, as reported by the 13
United States department of housing and urban development.14
(4) "Qualified light and power business" means a light and power 15
business as defined in RCW 82.16.010 that has a battery incentive 16
program as described in section 3 of this act that is approved by the 17
Washington State University extension energy program.18
(5) "Qualified light and power business customer" means a 19
residential customer, nonprofit organization, public entity, tribal 20
government, or academic institution. A multifamily housing tax equity 21
investor partnership may participate in the program if a nonprofit 22
organization, public entity, tribal government, or academic 23
institution is the controlling partner for that partnership.24
(6) "Residential battery energy storage system" means a 25
stationary and permanently installed battery system that can store 26
energy when production exceeds demand and release energy when energy 27
demand increases. A residential battery energy storage system is not 28
an industrial-scale battery energy storage system.29
(7) "Time-of-use rate" means an electricity billing structure 30
where the price of electricity varies based on the time of day it is 31
used, typically with higher prices during peak demand hours and lower 32
prices during off-peak hours, intended to encourage consumers to 33
shift their energy usage to less expensive periods.34
(8) "Virtual power plant" means an aggregation of connected 35
distributed energy resources that can balance electrical loads and 36
are coordinated to work together to provide utility grid services 37
like a traditional power plant. 38
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NEW SECTION. Sec. 3. A new section is added to chapter 82.16 1
RCW to read as follows: 2
(1) A qualified light and power business must have a battery 3
incentive program approved by the Washington State University 4
extension energy program to provide a battery incentive to customers 5
as described in section 4 of this act and to receive tax credits for 6
providing such an incentive as described in section 5 of this act.7
(2) A qualified light and power business battery incentive 8
program must include: 9
(a) A battery incentive payment for a qualified light and power 10
business customer; and 11
(b) A plan for how the qualified light and power business will 12
use the customer batteries by: 13
(i) Allowing retail time-of-use rates for qualified light and 14
power business customers who own batteries or other customer self-15
generation by July 1, 2026. A time-of-use rate may not reduce the 16
compensation rate for energy exported by a qualified light and power 17
business customer or discharged energy from the customer's 18
residential battery energy storage system or reduce the compensation 19
rate due to the location of the customer in the light and power 20
business' service territory; or 21
(ii) Incorporating the batteries into a utility-operated virtual 22
power plant that financially encourages qualified light and power 23
business customers to manage their electricity use to their benefit 24
so the utility can effectively manage the batteries collectively to 25
benefit utility grid operations. 26
(3) A light and power business must submit an application to 27
establish a battery incentive program to the Washington State 28
University extension energy program, and the Washington State 29
University extension energy program must evaluate whether to approve 30
the application based on whether the program as described in the 31
application meets the requirements for battery incentives in section 32
4 of this act and the requirements in this section, including:33
(a) At least 40 percent of the battery incentive program must 34
benefit low-income households and moderate-income households, low-35
income service providers, housing authorities, or tribal governments;36
(b) An application must be included for qualified light and power 37
business customers to apply for the battery incentive, which must 38
require income verification for low-income and moderate-income 39
customers. Income verification may be performed by low-income service 40
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providers, housing authorities, or tribal governments on behalf of a 1
light and power business; 2
(c) Leases to customers are not authorized; 3
(d) The time-of-use rate or virtual power plant must be used by 4
the qualified light and power business customer to lower the 5
customer's current total annual light and power expenses;6
(e) All expenses and upgrades proposed as part of program 7
implementation are documented; and 8
(f) A qualified light and power business may not sell or 9
aggregate qualified light and power business customer data for any 10
purposes beyond the direct operation of the battery incentive 11
program. 12
(4) A qualified light and power business may establish 13
residential battery energy storage system installer partners and 14
equipment specifications for the business' battery storage program.15
(5) If the Washington State University extension energy program 16
approves a light and power business battery incentive program 17
application, the qualified light and power business may commence such 18
a program. The Washington State University extension energy program 19
must audit a qualified light and power business' program at least 20
once every two years to verify that the program is implemented 21
according to the requirements outlined in this act.22
(6) The department of commerce must produce nonbinding 23
recommendations for light and power businesses for help in designing 24
virtual power plants for a battery incentive program. These 25
recommendations must be made public on the department of commerce's 26
website by December 1, 2025. 27
(7) A light and power business with more than 100,000 retail 28
electric customers in Washington must implement a battery incentive 29
program in accordance with this section. All other light and power 30
businesses may choose to implement a battery incentive program.31
NEW SECTION. Sec. 4. A new section is added to chapter 82.16 32
RCW to read as follows: 33
(1)(a) A qualified light and power business customer may apply to 34
the customer's light and power business for a one-time battery 35
incentive between July 1, 2026, and June 30, 2036, for the kilowatt-36
hours of installed storage from a residential battery energy storage 37
system. A qualified light and power business customer must be 38
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connected to a qualified light and power business time-of-use program 1
or virtual power plant to receive an incentive payment.2
(b) The battery incentive will be paid in the following amounts, 3
unless the requests exceed the amount authorized for credit to the 4
participating light and power business: 5
(i) For low-income and moderate-income qualified customers, the 6
incentive may be for up to $765 per kilowatt-hour of battery storage 7
capacity, capped at 18 kilowatt-hours per customer; and8
(ii) For all other customers, the initial incentive may be for up 9
to $450 per kilowatt-hour of battery storage capacity, capped at 18 10
kilowatt-hours per customer. 11
(2)(a) Before submitting an application for a battery incentive 12
to the light and power business, the qualified light and power 13
business customer must submit to the department and to the Washington 14
State University extension energy program, a certification in a form 15
and manner prescribed by the department that includes, but is not 16
limited to, the information described in (c) of this subsection. The 17
department may not accept certifications submitted to the department 18
under this subsection (2)(a) after September 30, 2037.19
(b) The certification must include: 20
(i) The name and address of the applicant and kilowatt capacity 21
of the residential battery energy storage system; 22
(ii) The applicant's tax registration number; and23
(iii) That the residential battery energy storage system has been 24
approved for use by the connected light and power business.25
(c) Within 30 days of receipt of the certification, the 26
department must notify the applicant by mail, or electronically as 27
provided in RCW 82.32.135, whether the residential battery energy 28
storage system qualifies for an incentive under this section. The 29
department may consult with the Washington State University extension 30
energy program to determine eligibility for the incentive.31
(3)(a) The application for an incentive must be made to the light 32
and power business serving the situs of the system by certification 33
in a form and manner prescribed by the department that includes, but 34
is not limited to, the following information: 35
(i) The name and address of the applicant and location and 36
kilowatt capacity of the residential battery energy storage system;37
(ii) The applicant's tax registration number; 38
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(iii) The date of the notification from the department stating 1
that the residential battery energy storage system is eligible for 2
the incentive under this section; and 3
(iv) A statement of the amount of storage capacity in kilowatts 4
and kilowatt-hours of the residential battery energy storage system.5
(b) Within 60 days of receipt of the incentive certification, the 6
light and power business serving the situs of the system must notify 7
the applicant in writing whether the incentive payment will be 8
authorized or denied. The business may consult with the Washington 9
State University extension energy program to determine eligibility 10
for the incentive payment. Incentive certifications and the 11
information contained therein are not confidential tax information 12
under RCW 82.32.330 and are subject to disclosure except for the name 13
and address or any other personally identifiable information of the 14
applicant. 15
(c) A qualified light and power business customer receiving 16
incentive payments must keep and preserve, for a period of five 17
years, suitable records as may be necessary to determine the amount 18
of incentive applied for and received. Such records must be open for 19
examination at any time upon notice by the light and power business 20
that made the payment or by the department. If upon examination of 21
any records or from other information obtained by the business or 22
department it appears that an incentive has been paid in an amount 23
that exceeds the correct amount of incentive payable, the business 24
may assess against the person for the amount found to have been paid 25
in excess of the correct amount of incentive payable and must add 26
thereto interest on the amount. Interest is assessed in the manner 27
that the department assesses interest upon delinquent tax under RCW 28
82.32.050. 29
(4) The environmental attributes of the renewable energy system 30
belong to the applicant, and do not transfer to the state or the 31
light and power business upon receipt of the investment cost recovery 32
incentive. 33
(5) No battery incentive may be paid under this section before 34
July 1, 2026, or after June 30, 2036. 35
NEW SECTION. Sec. 5. A new section is added to chapter 82.16 36
RCW to read as follows: 37
(1) A light and power business is allowed a credit against taxes 38
due under this chapter in an amount equal to: 39
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(a) Incentive payments made in any fiscal year under section 4 of 1
this act; and 2
(b) Expenses and upgrades associated with an approved battery 3
storage program as described in section 3 of this act. The credit for 4
expenses and upgrades may not exceed 20 percent of the total tax 5
credit for any fiscal year and may include: 6
(i) Advanced metering infrastructure; and 7
(ii) Applicable subscription fees paid by the light and power 8
business to operators of a virtual power plant. 9
(2) The credits must be taken in a form and manner as required by 10
the department. The credit taken under this section for the fiscal 11
year may not exceed 1.5 percent of the business's taxable Washington 12
power sales generated in calendar year 2022 and due under RCW 13
82.16.020(1)(b), for battery incentive payments made under section 4 14
of this act. 15
(3) The credit may not exceed the tax that would otherwise be due 16
under this chapter. Refunds may not be granted in the place of 17
credits. Expenditures not used to earn a credit in one fiscal year 18
may be used to earn a credit in subsequent years. 19
(4)(a) For any business that has claimed credit for amounts that 20
exceed the correct amount of the incentive payable under RCW 21
82.16.120, the amount of tax against which credit was claimed for the 22
excess payments is immediately due and payable. The department may 23
deduct amounts due from future credits claimed by the business.24
(b) The department must assess interest but not penalties on the 25
taxes against which the credit was claimed. Interest must be assessed 26
at the rate provided for delinquent excise taxes under chapter 82.32 27
RCW, retroactively to the date the credit was claimed, and accrues 28
until the taxes against which the credit was claimed are repaid.29
(5) The amount of credit taken under this section is not 30
confidential taxpayer information under RCW 82.32.330 and is subject 31
to disclosure. 32
(6) Beginning July 1, 2026, a tax credit can be earned for 33
incentive payments made under section 4 of this act. No tax credits 34
may be earned after June 30, 2036, and no tax credit may be claimed 35
after June 30, 2038. 36
(7) This section expires June 30, 2040. 37
NEW SECTION. Sec. 6. A new section is added to chapter 82.16 38
RCW to read as follows: 39
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(1) This section is the tax preference performance statement for 1
the tax preference contained in section 4, chapter . . ., Laws of 2
2025 (section 4 of this act). This performance statement is only 3
intended to be used for subsequent evaluation of the tax preference. 4
It is not intended to create a private right of action by any party 5
or be used to determine eligibility for preferential tax treatment.6
(2) The legislature categorizes the tax preference created under 7
this act as intended to induce certain designated behavior by 8
taxpayers as indicated in RCW 82.32.808(2)(a). 9
(3) It is the legislature's specific public policy objective to:10
(a) Induce participating utilities to make incentive payments to 11
utility customers who invest in battery energy storage on the 12
customer-side of the meter; 13
(b) Reduce the costs associated with installing and operating 14
residential battery energy storage systems by persons or entities 15
receiving the incentive; and 16
(c) Create and retain jobs in the clean energy sector.17
(4) As part of its 2030 tax preference reviews, the joint 18
legislative audit and review committee must review the tax preference 19
in section 4 of this act. The legislature intends for the legislative 20
auditor to determine that the incentive has achieved its desired 21
outcomes if the following objectives are achieved:22
(a) Installation of 50 megawatt-hours of battery energy storage 23
by participants in the battery incentive program between July 1, 24
2026, and June 30, 2036; and 25
(b) Growth of battery energy storage-related employment from 2025 26
levels, as evidenced by: 27
(i) An increased per capita rate of battery energy storage-28
related jobs in Washington, which may be determined by consulting a 29
relevant trade association in the state; or 30
(ii) Achievement of an improved national ranking for battery 31
energy storage -related employment, as reported in a nationally 32
recognized report. 33
(5) In order to obtain the data necessary to perform the review, 34
the joint legislative audit and review committee may refer to any 35
data collected by the state. 36
(6)(a) The Washington State University extension energy program 37
must collect, through the application process, data from persons 38
claiming the tax credit under section 5 of this act and persons 39
receiving the incentive payments created in section 4 of this act, as 40
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necessary, and may collect data from other interested persons as 1
necessary to report on the performance of this act including, but not 2
limited to: 3
(i) The number of participants, size of the storage systems 4
installed, and dollars spent on incentives; and 5
(ii) Energy storage program load flexibility and demand response 6
events. 7
(b) Names and addresses of persons receiving the incentive 8
payments are not subject to disclosure under chapter 42.56 RCW.9
(7) All recipients of tax credits or incentive payments awarded 10
under this chapter must provide data necessary to evaluate the tax 11
preference performance objectives in this section as requested by the 12
Washington State University extension energy program or the joint 13
legislative audit and review committee. Failure to comply may result 14
in the loss of a tax credit award or incentive payment in the 15
following year. 16
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