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Battery Tax Credits Are Rewriting US Solar Economics

37 min

The Trump administration's One Big Beautiful Bill Act unexpectedly boosted battery storage by phasing out solar tax credits while keeping them for storage through 2033. This creates a powerful incentive for developers to pair batteries with solar, reducing the levelized cost of electricity by up to 15% through a strategy called 'maxing' — maximizing project costs allocated to the battery side for tax credit eligibility. Co-located solar+storage installations grew 43% last year, and BNEF forecasts that 50% of new US solar projects will include batteries by 2035.

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✨ Key Takeaways

1

The One Big Beautiful Bill Act eliminated solar tax credits but preserved them for batteries until 2033, creating a powerful incentive for solar+storage pairing.
2

Co-located solar+storage installations grew 43% last year, with a 124 GW pipeline of such projects expected in the next decade.
3

Developers can reduce LCOE by up to 15% (to ~$75/MWh) by strategically allocating costs to the battery side — a strategy called 'maxing'.
4

Batteries help solve solar cannibalization and provide multiple revenue streams (arbitrage, capacity payments, grid services), especially in Texas and California.
5

Non-lithium chemistries like sodium-ion are emerging (e.g., Moonwatt's DC-coupled project in Spain) due to lower fire risk and insurance costs.

💬 Notable Quotes

"By accident, the Trump administration seems to have created a tax credit policy which massively incentivizes developers to add batteries at a time when the US grid is increasingly frustrated and is facing huge new loads from data centers."
"Batteries are essentially a component rather than an asset. Integrating batteries into solar projects is neither difficult nor out of reach for much of these large developers."
"Solar plus storage will be the dominant configuration of solar assets in the US going forward."