US investment tax credit regulations are unlikely to be updated before 2017.

The Internal Revenue Service is sorting through 25 to 30 comment letters as it gears up to rewrite its regulations on what part of a solar or other renewable energy project qualifies for an investment tax credit. The existing regulations were written in 1980 and are out of date.

The IRS asked for comments last October in Notice 2015-70.

Many of the letters comment on when batteries and other storage facilities should qualify for a tax credit as part of a project. The US tax code says that an investment credit can be claimed only on the equipment at a project that is used to “generate” electricity.

The IRS has issued three private letter rulings involving batteries. Two were issued to owners of large wind farms that expected to receive or had taken Treasury cash grants in lieu of investment tax credits. One owner was installing a large battery as part of the original construction of the project. Another was adding the battery after the project was already operating. The IRS said that an investment credit could be claimed in both cases. On average, only 3% of the electricity used to charge the battery was expected to come from the grid, as opposed to the wind farm, at one project, and only 15% of the electricity was expected to be from the grid at the other project.

A third private letter ruling confirmed that batteries installed with rooftop solar systems are considered part of the rooftop solar equipment on which an investment tax credit can be claimed, but because the solar company could not represent that the primary use of the battery will be to store the solar electricity as opposed to drawing electricity during off-peak hours from the grid, the IRS said a “75% cliff” applies. As a result, the tax credit is the actual percentage of solar electricity stored during the first year after the battery is put into service. For example, if the electricity used to charge the battery comes 90% from the solar panels and 10% from the grid the first year, then only a 27% investment credit (90% x 30%) can be claimed on the battery. Any dip in that percentage in any of the next four years will lead to full or partial recapture of any unvested tax credit. The solar usage must be at least 75% to qualify for any tax credit, the IRS said.

Many of the comment letters also comment on the 75% cliff. For example, the Solar Energy Industries Association urged the IRS to drop the 75% cliff or, alternatively, to apply a primary use test: as long as the primary use of the battery is to store renewable energy, then the battery qualifies for the full tax credit.

The issues raised by the comment letters, particularly around storage, are complicated. It will take the IRS time to organize a response.