Provides a tax credit for the cost of energy storage systems installed for the storage of electricity or another useful energy product created by electricity in order to shift electric loads to off-peak periods. (HD1)

A BILL FOR AN ACT

SECTION 1. The legislature finds that energy storage load shifting is a proven technology that can free-up on-peak power, decrease fossil fuel use, improve renewable energy utilization, and reduce energy costs by fully utilizing existing power generation and transmission facilities during off-peak periods. The legislature also finds that off-peak rate tariffs alone may not be enough of an incentive to facilitate load shifting. The legislature finds that it is in the public interest to encourage maximum use of Hawaii's already-existing power generation infrastructure by providing energy storage tax incentives to promote the use and development of energy storage systems in Hawaii.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-   Energy storage; income tax credit. (a) Each resident taxpayer who files an individual or corporate net income tax return for a taxable year may claim a tax credit under this section against the Hawaii state individual or corporate net income tax. The tax credit may be claimed for any eligible energy storage system owned by the taxpayer in an amount not to exceed an aggregate thirty-five per cent of the total cost of the energy storage system or $500,000, whichever is less; provided that the maximum tax credit taken in any single tax year may not exceed fifteen per cent of the total cost of each energy storage system; and provided further that the tax credit shall:

(b) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted; provided that in no event shall the tax credit exceed the aggregate or annual limits on tax credits provided in subsection (a).

(c) In the case of a corporation, partnership, S corporation, limited liability company, estate, or trust, the tax credit allowable is for every eligible energy storage system that is installed and placed in service by the entity; provided that in the case of a financing or leasing entity, the tax credit shall not be available unless at least ninety per cent of the net economic benefits of the tax credit are passed back through the financing or leasing terms to the actual user of the energy storage system.

The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to section 235-110.7(a).

(d) As used in this section, "energy storage system" refers to any device, container, or other physical medium that is installed for or converted to the storage of electricity or an energy product created by electricity, including any accessories, components, and controls that are a necessary part of the energy storage system; provided that an energy storage system is specifically designed and used to store electricity (or an energy product created by electricity) for the primary purpose of shifting the consumption of grid electricity to off-peak periods, as designated by the local regulated electric utility; provided further that an energy storage system shall not include hot water storage systems, air ductwork, air devices, or cooling towers.

(e) The director of taxation shall prepare forms as necessary to claim a credit under this section. The director may also require the taxpayer to furnish reasonable information to ascertain the validity of the claim for credit made under this section and may adopt rules pursuant to chapter 91 to effectuate the purposes of this section."

SECTION 3. Section 241-4.6, Hawaii Revised Statutes, is amended to read as follows:

"§241-4.6 Renewable energy technologies[;] and energy storage systems; income tax credit. (a) The renewable energy technologies income tax credit provided under section 235-12.5 shall be operative for this chapter for taxable years beginning after December 31, 2002; provided that the system was installed after June 30, 2003.

(b) The energy storage systems income tax credit provided under section 235-   shall be operative for this chapter for taxable years beginning after December 31, 2004; provided that the system was installed after December 31, 2004."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2050 and apply to taxable years beginning after December 31, 2004.