NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A313
SPONSOR: Paulin TITLE OF BILL:
An act to amend the tax law, in relation to establishing a sales tax
exemption for energy storage
PURPOSE OR GENERAL IDEA OF BILL:
This legislation would exempt retail sale and installation of commercial
energy storage equipment from state sales and use taxes. It further
provides local governments with the authority to exempt energy storage
from local sales and use taxes.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Amends section 1115 of the tax law by adding subdivision(mm)
to exempt commercial energy storage systems equipment and the service of
installing such systems from state sales and use taxes.
Sections 2 and 3: Amends section 1210 of the tax law to authorize local
governments have the option to apply tax exemptions for residential and
commercial energy storage systems equipment and electricity.
Section 4: provides the effective date.
JUSTIFICATION:
New York State tax law provides sales and use tax exemptions for a
number of activities, products, and services. Notably, the sale and
installation of residential and commercial solar energy equipment and
commercial fuel cells are exempt from the state sales and use tax and
certain localities have followed suit.
The energy storage energy has attempted to rely on existing sections of
the state tax law to seek a similar exemption from state sales and use
taxes. For example, Section 1115(a) (12) of the tax law provides an
exemption for machinery and equipment for use and consumption directly
and predominantly in the production of electricity by generating.
Section 1105-B of the tax law also exempts parts, tools, and supplies
used in the production of electricity for sale by generating. Receipts
from the services of installing, repairing, maintaining, or servicing
such machinery, equipment, parts, tools, and supplies are exempt from
the tax imposed on these services under section 1105(c) (3).
However, according to an advisory opinion (1) issued by the Department
of Tax and Finance in relation to a specific project, the energy storage
equipment must first be considered a generation facility, and section
1115(a)(12) of the tax law requires that the machinery and equipment be
used directly and predominantly in the production of electricity for
sale by generating. This interpretation is problematic for energy stor-
age which is typically used to inject energy into the energy grid less
than 50 percent of the time. Moreover, energy storage is not considered
generation under Public Service Law, and thus attempting to define it as
generation for the purposes of tax law could create a more complex and
troublesome legal situation in relation to the treatment of storage for
other purposes.
In 2019, New York State codified the most aggressive climate goals in
the nation, requiring New York to achieve 100 percent carbon-free energy
by 2040 (The Climate Leadership and Community Protection Act). In addi-
tion to greenhouse gas reduction goals, the CLCPA requires the state to
have three gigawatts of energy storage installed by 2030.
Energy storage is a key enabling technology to achieve the 'state's
renewable energy and climate goals, providing increased grid flexibility
ty, enabling the wide scale deployment of renewable energy; promoting
efficient use of grid resources and enhancing grid resiliency. The state
Public Service Commission recognized the critical role for storage in
its Energy Storage Order adopting the state's roadmap for storage and
authorizing the state Energy Research and Development Authority (NYSER-
DA) to implement new incentive programs for energy storage. While these
efforts have jumpstarted energy storage projects across the state, the
cost of deploying and maintaining energy storage remains high.
A provision providing for tax exemptions for residential energy storage
passed in the budget for the 2025 fiscal year. This legislation will
build on the budget provision by providing the same exemption for
commercial energy storage systems equipment and electricity. According-
ly, such exemption will help reduce the cost of deploying energy storage
projects and give energy storage technology similar tax exemptions to
solar energy and fuels cells, creating a fair and level playing field
for clean energy technologies while stimulating the state's economy and
creating new green collar jobs.
PRIOR LEGISLATIVE HISTORY:
2020: A.10286 (Cusick)- referred to ways and means. Same as S. 8219
referred to budget and revenue.
2021/2022: A.7316 (Cusick) - referred to ways and means. Same as S.3277
reported and committed to Finance.
2023/2024: A.4954 - referred to ways and means. Same as S.4547, reported
and committed to finance (2023), referred to budget and revenue (2024).
FISCAL IMPLICATIONS:
Undetermined.
EFFECTIVE DATE:
Immediately.
