MICROGRID Act

I 117TH CONGRESS 1ST SESSION H. R. 2482 To amend the Internal Revenue Code of 1986 to provide tax credits for microgrid property. IN THE HOUSE OF REPRESENTATIVES APRIL 13, 2021 Mr. PANETTA introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide tax credits for microgrid property. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Making Imperiled 4 Communities Resistant to Outages with Generation that 5 is Resilient, Islandable, and Distributed Act’’ or as the 6 ‘‘MICROGRID Act’’. 7 SEC. 2. TAX CREDITS FOR MICROGRID PROPERTY. 8 (a) IN GENERAL.—Subpart E of part IV of sub- 9 chapter A of chapter 1 of the Internal Revenue Code of 10 VerDate Sep 11 2014 03:05 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2482.IH H2482 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 2482 IH 1986 is amended by inserting after section 48C the fol- 1 lowing new section: 2 ‘‘SEC. 48D. MICROGRID PROPERTY. 3 ‘‘(a) IN GENERAL.—For purposes of section 46, the 4 microgrid property credit for any taxable year is an 5 amount equal to the applicable percentage of the basis of 6 the qualified microgrid property placed in service by the 7 taxpayer during such taxable year. 8 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 9 this section— 10 ‘‘(1) IN GENERAL.—The term ‘applicable per- 11 centage’ means, with respect to qualified microgrid 12 property which is part of any qualified microgrid, 13 the percentage determined in accordance with the 14 following table determined with respect to the cal- 15 endar year in which construction of such qualified 16 microgrid begins: 17 ‘‘In the case of calendar year: The applicable percentage is: 2025 or any prior calendar year ............................ 30 percent 2026 ....................................................................... 26 percent 2027 ....................................................................... 22 percent 2028 ....................................................................... 10 percent. ‘‘(2) TREATMENT OF CONVERSIONS.—In the 18 case of any system which is converted into a quali- 19 fied microgrid, the construction of such microgrid 20 shall be treated for purposes of this subsection as 21 VerDate Sep 11 2014 03:05 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2482.IH H2482 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 2482 IH beginning on the date on which such conversion be- 1 gins. 2 ‘‘(c) QUALIFIED MICROGRID PROPERTY.—For pur- 3 poses of this section— 4 ‘‘(1) IN GENERAL.—The term ‘qualified 5 microgrid property’ means any qualified property— 6 ‘‘(A) which is part of a qualified microgrid, 7 ‘‘(B) either— 8 ‘‘(i) the construction, reconstruction, 9 or erection of which is completed by the 10 taxpayer, or 11 ‘‘(ii) which is acquired by the taxpayer 12 if the original use of such property com- 13 mences with the taxpayer, 14 ‘‘(C) which is not part of a bulk-power sys- 15 tem (as defined in section 215 of the Federal 16 Power Act (16 U.S.C. 824o)), and 17 ‘‘(D) with respect to which depreciation (or 18 amortization in lieu of depreciation) is allow- 19 able. 20 ‘‘(2) QUALIFIED MICROGRID.—The term ‘quali- 21 fied microgrid’ means an electrical system which— 22 ‘‘(A) incorporates a microgrid controller, 23 VerDate Sep 11 2014 03:05 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2482.IH H2482 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 2482 IH ‘‘(B) includes equipment which is capable 1 of generating not less than 4 kilowatts and not 2 greater than 50 megawatts of electricity, 3 ‘‘(C) is capable of operating in connection 4 with the electrical grid and as a single control- 5 lable entity with respect to such grid, and 6 ‘‘(D) is capable of operating independently 7 (and disconnected) from such grid. 8 ‘‘(3) QUALIFIED PROPERTY.— 9 ‘‘(A) IN GENERAL.—The term ‘qualified 10 property’ means— 11 ‘‘(i) microgrid controllers, and 12 ‘‘(ii) electric distribution and 13 switchgear property. 14 ‘‘(B) ADDITIONAL CONSIDERATIONS.— 15 Upon consultation with the Secretary of En- 16 ergy, the Secretary may determine that a quali- 17 fied property under this section includes prop- 18 erty connected to the bulk power system (as de- 19 fined in section 215 of the Federal Power Act 20 (16 U.S.C. 824o)). 21 ‘‘(4) MICROGRID CONTROLLER.—The term 22 ‘microgrid controller’ means, with respect to oper- 23 ation and islanding of a qualified microgrid, the 24 equipment which is necessary to monitor and control 25 VerDate Sep 11 2014 03:05 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2482.IH H2482 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 2482 IH the energy resources and loads on such microgrid to 1 maintain acceptable frequency, voltage, or economic 2 dispatch. Such term includes any software and net- 3 working hardware necessary to the operation of such 4 equipment. 5 ‘‘(5) ELECTRIC DISTRIBUTION AND 6 SWITCHGEAR PROPERTY.—The term ‘electric dis- 7 tribution and switchgear property’ means, with re- 8 spect to operation and islanding of a qualified 9 microgrid, the equipment which is necessary to de- 10 liver electric power from energy resources on such 11 microgrid to loads on the same such microgrid. Such 12 term includes breakers, fuses, wires, switchgear cabi- 13 nets and bussing, paralleling switchgear, trans- 14 formers, power quality correction equipment, trans- 15 fer switches, disconnects, protective relays, metering 16 equipment, and wired and wireless communications 17 equipment necessary to the operation of such 18 microgrid. 19 ‘‘(6) TREATMENT OF SPARE PARTS.—Any 20 qualified property which is held by the taxpayer as 21 a spare part for possible replacement of qualified 22 property which is part of a qualified microgrid shall 23 not fail to be treated as part of such microgrid for 24 purposes of this section. 25 VerDate Sep 11 2014 03:05 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2482.IH H2482 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 2482 IH ‘‘(d) SPECIAL RULES.— 1 ‘‘(1) CERTAIN PROGRESS EXPENDITURE RULES 2 MADE APPLICABLE.—Rules similar to the rules of 3 subsections (c)(4) and (d) of section 46 (as in effect 4 on the day before the date of the enactment of the 5 Revenue Reconciliation Act of 1990) shall apply for 6 purposes of this section. 7 ‘‘(2) DENIAL OF DOUBLE BENEFIT.—No credit 8 shall be determined under this section with respect 9 to the basis of any property if a credit is determined 10 under any other section of this title with respect to 11 such basis. 12 ‘‘(e) ALLOWANCE OF PERSONAL CREDIT FOR RESI- 13 DENTIAL MICROGRIDS.—In the case of a qualified 14 microgrid placed in service by any individual in the resi- 15 dence of such individual— 16 ‘‘(1) this section shall be applied without regard 17 to subparagraph (C) of subsection (c)(1), and 18 ‘‘(2) the microgrid property credit determined 19 under this section for any taxable year with respect 20 to qualified microgrid property (determined after ap- 21 plication of paragraph (1)) which is part of such 22 qualified microgrid shall be taken into account as an 23 increase in the amount of the credit otherwise allow- 24 VerDate Sep 11 2014 03:05 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2482.IH H2482 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 2482 IH able to the taxpayer under section 25D for such tax- 1 able year. 2 ‘‘(f) TERMINATION.—No credit shall be determined 3 under this section with respect to any property placed in 4 service after December 31, 2028.’’. 5 (b) ELECTIVE PAYMENT OF CREDIT.—Subchapter B 6 of chapter 65 of such Code is amended by adding at the 7 end the following new section: 8 ‘‘SEC. 6431. ELECTIVE PAYMENT OF MICROGRID PROPERTY 9 CREDIT. 10 ‘‘(a) ENERGY PROPERTY.—In the case of an eligible 11 person making an election (at such time and in such man- 12 ner as the Secretary may provide) under this section with 13 respect to any portion of the credit determined under sec- 14 tion 48D (determined without regard to subsection (d) of 15 this section) or any portion of the credit allowed under 16 section 25D by reason of section 48D(e) (as so deter- 17 mined), such eligible person shall be treated as making 18 a payment against the tax imposed by subtitle A for the 19 taxable year equal to the portion to which such election 20 applies. 21 ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur- 22 poses of this section— 23 ‘‘(1) ELIGIBLE PERSON.—The term ‘eligible 24 person’ means— 25 VerDate Sep 11 2014 03:05 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2482.IH H2482 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 2482 IH ‘‘(A) any organization exempt from tax 1 under section 501(a), 2 ‘‘(B) any State or local government, or a 3 political subdivision thereof, or any agency, au- 4 thority, or instrumentality of any one or more 5 of the foregoing, or any corporation which is 6 wholly owned, directly or indirectly, by any one 7 or more of the foregoing, 8 ‘‘(C) any Indian tribal government, 9 ‘‘(D) any organization described in section 10 1381(a)(2), and 11 ‘‘(E) any not-for-profit electric utility 12 which had or has received a loan or loan guar- 13 antee under the Rural Electrification Act of 14 1936. 15 ‘‘(2) INDIAN TRIBAL GOVERNMENT.—The term 16 ‘Indian tribal government’ shall have the meaning 17 given such term by section 139E. 18 ‘‘(3) DETERMINATION OF CREDITS.—The 19 amount of any credit described in subsection (a) 20 which is treated as allowed to any eligible person 21 shall be determined for purposes of such subsection 22 in the same manner as though such eligible person 23 were subject to the tax imposed under chapter 1. 24 VerDate Sep 11 2014 03:05 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2482.IH H2482 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 2482 IH ‘‘(4) TIMING.—The payment described in sub- 1 section (a) shall be treated as made on— 2 ‘‘(A) in the case of any government, or po- 3 litical subdivision, to which paragraph (1) ap- 4 plies and for which no return is required under 5 section 6011 or 6033(a), the later of the date 6 that a return would be due under section 7 6033(a) if such government or subdivision were 8 described in that section or the date on which 9 such government or subdivision submits a claim 10 for credit or refund (at such time and in such 11 manner as the Secretary shall provide), and 12 ‘‘(B) in any other case, the later of the due 13 date of the return of tax for the taxable year 14 or the date on which such return is filed. 15 ‘‘(5) WAIVER OF SPECIAL RULES.—In the case 16 of an election under this section, the determination 17 of any applicable credit shall be without regard to 18 paragraphs (3) and (4)(A)(i) of section 50(b). 19 ‘‘(6) GOVERNMENTAL ENTITIES TREATED AS 20 TAXPAYERS.—In the case of an election under this 21 section— 22 ‘‘(A) any State or local government, or a 23 political subdivision thereof, or 24 ‘‘(B) any Indian tribal government, 25 VerDate Sep 11 2014 03:05 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2482.IH H2482 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 2482 IH shall, to the extent not a taxpayer as defined under 1 section 7701(a)(14), be treated as a taxpayer for 2 purposes of this section and determining any appli- 3 cable credit. 4 ‘‘(c) EXCLUSION FROM GROSS INCOME.—Gross in- 5 come of the taxpayer shall be determined without regard 6 to this section. 7 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—The credit oth- 8 erwise determined under section 45D (and the credit oth- 9 erwise allowed under section 25D by reason of section 10 48D(e)), determined without regard to this subsection, 11 shall be reduced by the amount of the portion of such 12 credits with respect to which the taxpayer makes the elec- 13 tion under subsection (a).’’. 14 (c) CONFORMING AMENDMENTS.— 15 (1) Section 46 of such Code is amended by 16 striking ‘‘and’’ at the end of paragraph (5), by strik- 17 ing the period at the end of paragraph (6) and in- 18 serting ‘‘, and’’, and by adding at the end the fol- 19 lowing new paragraph: 20 ‘‘(7) the microgrid property credit.’’. 21 (2) Section 49(a)(1)(C) of such Code is amend- 22 ed by striking ‘‘and’’ at the end of clause (iv), by 23 striking the period at the end of clause (v) and in- 24 VerDate Sep 11 2014 03:05 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2482.IH H2482 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 2482 IH serting a comma, and by adding at the end the fol- 1 lowing new clause: 2 ‘‘(vi) the basis of any qualified 3 microgrid property under section 48D.’’. 4 (3) Section 50(a)(2)(E) of such Code is amend- 5 ed by striking ‘‘or 48C(b)(2)’’ and inserting 6 ‘‘48C(b)(2), or 48D(d)(1)’’. 7 (4) The table of sections for subpart E of part 8 IV of subchapter A of chapter 1 of such Code is 9 amended by inserting after the item relating to sec- 10 tion 48C the following new item: 11 ‘‘Sec. 48D. Microgrid property.’’. (5) The table of sections for subchapter B of 12 chapter 65 of such Code is amended by adding at 13 the end the following new item: 14 ‘‘Sec. 6431. Elective payment of microgrid property credit.’’. (d) EFFECTIVE DATE.—The amendments made by 15 this section shall apply to periods after December 31, 16 2020, under rules similar to the rules of section 48(m) 17 (as in effect on the day before the date of the enactment 18 of the Revenue Reconciliation Act of 1990). 19 Æ VerDate Sep 11 2014 03:05 Jun 08, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\H2482.IH H2482 pbinns on DSKJLVW7X2PROD with BILLS