HB 11 — ENERGY STORAGE SYSTEM TAX CREDIT

HB 11/a HOUSE BILL 11 55TH LEGISLATURE -STATEOFNEWMEXICO-- STATEOFNEWMEXICO- SECOND SESSION , 2022 INTRODUCED BY Debra M.

Dixon and Mimi Stewart andThis Elizabethdocument "Liz”may Stefanicsincorporate 7amendments FORproposed THEby SCIENCE,a TECHNOLOGYcommittee, ANDbut TELECOMMUNICATIONSnot COMMITTEEyet 10adopted, ANas ACTwell RELATINGas TOamendments ENERGY;that have been adopted during the current legislative session.

CREATINGThe THEdocument ENERGYis STORAGEa SYSTEMtool INCOMEto TAXshow CREDIT;amendments in context and cannot be used for the purpose of adding amendments to legislation.

REQUIRINGFOR THE ENERGY,SCIENCE, MINERALSTECHNOLOGY AND NATURALTELECOMMUNICATIONS RESOURCESCOMMITTEE DEPARTMENTh TOAN PROVIDEACT ANg ANNUALo REPORT;RELATING TO ENERGY;

PROVIDINGCREATING FOR THE ESTABLISHMENT OF AN ENERGY STORAGE SYSTEM INCOME TAXt CREDIThr INSTALLATIONg WEBSITEe BYi THEk ENERGY,TAX MINERALSCREDIT; AND NATURAL RESOURCES DEPARTMENT;

REQUIRING THE ENERGY, MINERALS AND NATURAL h r i s RESOURCES DEPARTMENT TO PROVIDE AN ANNUAL REPORT;

PROVIDING FOR h , t, THE ESTABLISHMENT OF AN ENERGY STORAGE SYSTEM INCOME TAX CREDIT e u g e b l e e h INSTALLATION WEBSITE BY THE ENERGY, MINERALS AND NATURAL n d d i = = o h RESOURCES DEPARTMENT;

MAKING el t] 17b ,d i a º e AN APPROPRIATION.

wr li n d 18 = =r 19t ae lw BEd ITm ENACTEDa BYn THEo LEGISLATUREd OFm THE: STATE OF NEW MEXICO:

ib e d s º o t n = .221312.2AIC January 25, 2022 (10:36am) s k m e e a n e d r 20e SECTIONl 1.u [ A d HB 11/a BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

ASECTION new1. section of the Income Tax Act is enacted a t m m 21 to read:

dA rnew esection 22of "[NEWthe MATERIAL]Income ENERGYTax STORAGEAct SYSTEMis INCOMEenacted TAXto CREDIT.--read: c e s k 23 A.

For"[NEW taxableMATERIAL] yearsENERGY priorSTORAGE toSYSTEM JanuaryINCOME 1,TAX 2025,CREDIT.-- aA. e a n b 24 taxpayer who is not a dependent of another individual and who u [ purchases or installs an energy storage system on the .221312.2 taxpayer's agricultural, business or residential property may apply for, and the department may allow, a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act subject to the provisions of Subsection C of this section.

For taxable years prior to January 1, 2025, a taxpayer who is not a dependent of another individual and who purchases or installs an energy storage system on the taxpayer's agricultural, business or residential property may apply for, and the department may allow, a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act subject to the provisions of Subsection C of this section.

The credit provided by this section may be referred to h g as the "energy storage system income tax credit".

o t hr C.

The department shall allow an energy storage g e i k system income tax credit only for the purchase and installation h r i s h of an energy storage system that:that HENRCº is certified by the , t, e u g energy, minerals and natural resources department to»HENRC :

e b l e e h (1) isHENRCº is»HENRC HENRCºbe»HENRC installed n d d i = = o h on an agricultural, business or residential property;

l ] b ,d i a º e tr 17i = r (2) isHENRCºis»HENRC HENRCºbe»HENRC installed fort usee withw d m a newn oro wfor luse nwith da 18new or existing photovoltaic system;

=d =m 19: a l (3) is installed as a freestanding system;

ib e d s º o t n = .221312.2AIC January 25, 2022 (10:36am) s k m e - 2 - e a n e d r 20e (4)l hasu [ A d HB 11/a HENRCº(3) is installed as a minimumfreestanding ofsystem;»HENRC twoHENRCº hours(4)»HENRC HENRCº(3)»HENRC HENRCº has»HENRC HENRCºhave a rating of storagefour kilowatts or greater with»HENRC a tminimum mof mtwo 21hours capacity;of storage HENRCº capacity»HENRC;

dHENRCº r(5)»HENRC eHENRCº(4)»HENRC 22HENRCº (5)is»HENRC isHENRCºbe»HENRC installed in a manner that meets the c e s k 23 permitting requirements established by local ordinance or state e a n b 24 law;

and uHENRCº(6) [ (6) is installed in a manner so that it can be .221312.2 - 2 - used as a shared resource with a utility when such control and communication infrastructure exists.exists.»HENRC HENRCº(5) be installed as a stand-alone energy storage system;

or, if the energy storage system is grid-tied, the energy storage system has the capability to provide grid services if and when such control and communication h g infrastructure exists with the service provider.»HENRC o t hr D.

The energy storage system income tax credit g e i k h r shall be forty percent of the total cost to purchase and i s h install the system, up to a maximum credit of five thousand , t, e u g dollars ($5,000).

e b l e e h n d d i E.

An energy storage system income tax credit shall = = o h l ] b ,d apply to the components and installation costs that are i a º e r i = r specific to the storage system itself and shall not apply to equipmentt ore installationw costsd form energya generation.n o d m :

b e d s º o t n = .221312.2AIC January 25, 2022 (10:36am) s k m e - 3 - e a n e d r e l u [ A d HB 11/a equipment or installation costs for energy generation.

provided that if the annual aggregate amount of energy storage system income tax credits established pursuant to Subsection G of this section has been met at the time of the claim, the department e t 17 shall notify the taxpayer and the taxpayer may claim the credit w l n d 18 in the following year.

To receive the tax credit, a taxpayer = = 19 a l shall apply to the department on forms and in the manner i a e r 20 prescribed by the department showing the total cost of the a t m m 21 energy storage system and installation and the date of d r e 22 installation.

The application shall include anHENRCº identificationa ccertification epursuant sto kSubsection 23C of this section and»HENRC an identification number for the energy storage system installation provided by e a n b 24 the energy, minerals and natural resources department.

uh [g G.

The department shall allow a maximum annual .221312.2o -t 3hr - aggregate of one million dollars ($1,000,000) in energy storage g e i k system income tax creditsHENRCº credits»HENRC HENRCºcredit h r i s h claims»HENRC per calendar year.

Completed applications for the , t, e u g credit shall be considered in the order received by the e b l e e h department and recorded by installation date.

If the maximum n d d i = = o h annual aggregate is met in a calendar year, the department l ] b ,d i a º e r i = r shall post a notice on its website that no other energy storage t e w d m a n o systems may be eligible for a tax credit for that calendar year.d m :

b e d s º o t n = .221312.2AIC January 25, 2022 (10:36am) s k m e - 4 - e a n e d r e l u [ A d HB 11/a year.

Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the energy storage system e t 17 income tax credit that would have been claimed on a joint w l n d 18 return.

= = 19 a l J.

A taxpayer may be allocated the right to claim i a e r 20 an energy storage system income tax credit in proportion to the a t m m 21 taxpayer's ownership interest if the taxpayer owns an interest d r e 22 in a business entity that is taxed for federal income tax c e s k 23 purposes as a partnership or limited liability company and that e a n b 24 business entity has met all of the requirements to be eligible uh [g for the credit.

The total credit claimed by all members of the .221312.2o -t 4hr - partnership or limited liability company shall not exceed the g e i k allowable credit pursuant to Subsection D of this section.