Tax Opportunities for Battery Energy Storage Systems (BESS)

There are significant tax opportunities related to the investment in battery energy storage technologies.

Disclaimer: We would encourage you to seek your own tax advice. This article highlights key points in our own interpretation of the tax opportunities related to the investment in battery energy storage technologies. (We’re always happy to provide assistance, you can contact us here.)

Investment Tax Credits (ITC)

30% refundable ITC for storage announced in Canada’s Fall Economic Statement expected to be legislated in April 2023 budget. It is our understanding that the ITC will be able to be claimed in the taxation year in which the qualified expenditure is incurred (regardless of when the related equipment becomes available for use).

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Capital Cost Allowance (CCA)

eLAB falls within the Technical Guide to class 43.1 and 43.2 (2019 Edition) where it states electrical energy storage equipment is eligible for the accelerated tax pools. For projects that come online in 2023, 100% of those eligible costs are deductible for tax. For projects that come online in 2024 and 2025, 75% of those eligible costs are deductible for tax per year (on a declining balance basis).

Learn more about CCA via NRCAN here

The ITC will reduce the capital cost of the relevant CCA classes in the taxation year following the taxation year in which the ITC is claimed.