Home Energy improvement credit 2021 Fuel Cell / Home Electric Generator

[GAOrtopan]

We installed a 22Kw home generator, which uses natural gas fuel, as an alternative electric source for our home in June 2021.  I have a home office for my work.  Does the generator qualify as a  fuel cell system? Or an Energy Efficient Building Property for our 2021 taxes?

[LeonardS]

No, the 22KW natural gas fuel generator does not qualify as a fuel cell system, A fuel cell is a device that generates electricity through an electrochemical reaction, not combustion.  And it does not qualify as energy efficient building property.

Qualified energy efficiency improvements include the following qualifying products:

• Energy-efficient exterior windows, doors and skylights
• Roofs (metal and asphalt) and roof products
• Insulation

Residential energy property expenditures include the following qualifying products:

• Energy-efficient heating and air conditioning systems
• Water heaters (natural gas, propane or oil)
• Biomass stoves (qualified biomass fuel property expenditures paid or incurred in taxable years beginning after December 31, 2020, are now part of the residential energy efficient property credit for alternative energy equipment.)

Ref: IRS  Energy Incentives for Individuals: Residential Property Updated Questions and Answers

[bwsantana]

How about generators in off-grid homes using solar panels and battery storage for energy?

[Vanessa A]

For 2022, if you installed the battery storage or the solar panels, yes, those items may qualify for the Home Energy Credit.

Battery storage must have a capacity of at least 3kwh in order to qualify

The generator itself, does not qualify. 

[Opus 17]

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@bwsantana wrote:

How about generators in off-grid homes using solar panels and battery storage for energy?

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Solar panels qualify for a credit if installed on a home you use as a residence.  It doesn't have to be your main home, but you have to live there as a residence at least part of the time.  If you installed battery storage as part of the solar system, that may also qualify.  The law as it stands for 2022 was not specific about batteries, but if the batteries were installed as part of the overall solar system, most experts I have read will consider they qualify.  The law was updated so that starting in 2023, the batteries must have at least 3kWh capacity.

The backup generator does not qualify for any credit.