February 6, 2019 Read More →

Trade group officials say end of tax credit won’t stop U.S. wind power development

S&P Global Market Intelligence ($):

The end of the federal tax subsidy that has buoyed the U.S. wind sector will not impede the industry’s growth despite numerous estimates that wind installations will drop dramatically, say analysts from the American Wind Energy Association.

The wind industry’s largest trade group and lobbying body expects strong demand from utilities as well as commercial and industrial customers into 2019 and beyond, AWEA senior analyst Celeste Warner said in an interview with S&P Global Market Intelligence. Utilities and corporate customers signed a combined 8,507 MW in power purchase agreements in 2018, while annual domestic wind installations grew 8% year over year to 7,588 MW in 2018.

Strong demand will come from both corporate purchasers and “utilities [who have] announced plans to add over 3,000 MW under direct ownership,” she said. “You’re already seeing a number of announcements indicating strong demand going forward.”

The production tax credit, or PTC, which provides $23/MWh over the first 10 years of a project’s life, has helped fuel consistent growth in the U.S. wind sector since Congress extended it in 2015. However, the deal included a schedule to step down in value by 20% annually based on construction-start dates until phasing out completely after 2019. Power forecasters have projected that wind capacity additions will continue to grow through 2020 and then drop by half in 2021.

Warner said the PTC has been “a very successful policy,” bringing wind’s costs down by 69% since 2009. Those cost reductions have combined with innovation in turbine technology and project operations, said John Hensley, vice president of AWEA’s research and analytics unit. In addition, investors have become more comfortable with wind project assets now that they better understand the technology and the economics.

Even as the PTC phases out, the industry expects to continue to cut costs and remain competitive with other energy sources. “The industry has been on this relentless cost reduction drive … there really is no expectation that the cost reductions stop,” Hensley said in an interview. “That cost reduction is going to continue, which goes a long way for making up some of that lost value of the PTC.”

More ($): Tax credits’ end won’t impede US wind growth, AWEA says

 

Comments are closed.