Provisional depreciation rate for battery energy storage systems (modular)

This determination sets a provisional depreciation rate for a new asset class of battery energy storage systems (modular).

Note to Determination PROV28

The Commissioner sets a depreciation rate for Battery Energy Storage Systems (modular) as a new asset class.  These are used to store energy generated during off-peak periods for use during peak-demand periods, or available as an energy backup system when power generation is unable to meet energy demand or is out of service.

Scope of Determination 

As power generation companies increase power generation, they have included renewable energy from sources such as wind and sun to assist when generation from other, conventional sources, cannot be guaranteed.  The use of modular battery energy storage systems provides somewhere to store energy for use when demand is high and smoothes out fluctuations in energy supply, to provide a more secure, stable, efficient, and resilient electricity grid.

Battery Energy Storage Systems come in different forms and capacity, and some can be used in home and business storage systems.  However, this provisional depreciation determination will only apply to Battery Energy Storage Systems that are modular units used by the power generation industry and in the national grid distribution networks.

Determination

PROV28: Tax Depreciation Rates Provisional Determination Number 28

This determination may be cited as “Determination PROV28 Tax Depreciation Rates Provisional Determination Number 28: Battery Energy Storage Systems (modular)”.

Application

This determination applies to taxpayers who own items of depreciable property of the kind listed in the table below.

This determination applies to the 2025 income year and subsequent income years.

Determination

Pursuant to section 91AAF of the Tax Administration Act 1994, the general determination will apply to the kind of items of depreciable property listed in the table below by adding to the “Power Generation and Electrical Reticulation Systems” industry category and the “Reticulation Systems, including Power Generation (excluding electrical communication and gas reticulation)” asset category, in the General Depreciation Rates, the estimated useful life, and general diminishing value and straight-line depreciation rates, for the asset class listed below: 

Interpretation

This determination, unless the context otherwise requires, words and terms have the same meaning as in the Income Tax Act 2007 and the Tax Administration Act 1994, as applicable.

This determination is signed by me on the 4th day of February 2026.

Stephen Donaldson

Technical Lead, Legal Services

Inland Revenue