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Modified Accelerated Cost Recovery System

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Modified Accelerated Cost Recovery System (MACRS) depreciation applies to storage depending on who owns the battery and how the battery is charged. The following schematic published by NREL explains which type of MACRS applies to which system:

nrel_schematic

You can find the exact schedule for MACRS (Table A-1) in this IRS document: https://www.irs.gov/pub/irs-pdf/p946.pdf

macrs_schedule

Table: MACRS Schedule by IRS

In HOMER Grid, you can apply MACRS to the following components:

Solar

Storage

MACRS_design

 

Below is an explanation of the various inputs in MACRS

 

Variable

Description

Marginal tax percent (%)

The percentage of tax rate on the purchased asset

Eligible percent (%)

Percentage of the capital cost eligible for the incentive

Applies to

The components that this bonus depreciation applies to

Example:

Assume a Storage of 100 kWh with a total capital cost of 100,000 $. Apply the below MACRS incentive to the PV component.

macrs_example

Assume that our simulation did not include a PV component. From the schematic from NREL, we know that this storage system is eligible for a 7 year MACRS. Then according to the 7 year MACRS schedule from IRS:

Year

Percentage (%)

MACRS value ($)

0

0.1429

0.1429 * 0.21 * 100,000 = 3001

1

0.2449

0.2449 * 0.21 * 100,000 = 5143

2

0.2449

0.2449 * 0.21 * 100,000 = 3673

3

0.1249

0.1249 * 0.21 * 100,000 = 2623

4

0.0893

0.0893 * 0.21 * 100,000 = 1875

5

0.0892

0.0892 * 0.21 * 100,000 = 1873

6

0.0893

0.0893 * 0.21 * 100,000 = 1875

7

0.0446

0.0446 * 0.21 * 100,000 = 937

 

Source: https://www.nrel.gov/docs/fy18osti/70384.pdf

 

 

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