BNEF: Extending renewables tax credits could boost wind, solar installations by 56%


Thursday, December 17, 2015 5:28 PM ET
BNEF: Extending renewables tax credits could boost wind, solar installations by 56%By Michael Copley

A proposal to extend the production and investment tax credits for five years could attract $73 billion in new investment and lead to the installation of 56% more wind and solar capacity than would otherwise be built, according to Bloomberg New Energy Finance.

The U.S. House of Representatives on Dec. 16 put forward a $1.1 trillion appropriations bill that would extend the renewable energy tax breaks. Under the proposal, the production tax credit, or PTC, which pays $23 per MWh that a wind farm generates and expired at the end of 2014, would be cut by 20% in 2017, 40% in 2018 and 60% in 2019. The investment tax credit, or ITC, which is scheduled to fall to 10% from 30% of project costs at the end of 2016, instead would fall to 26% in 2020, 22% in 2021 and 10% thereafter.

With those adjustments, new U.S. wind installations could total about 35,100 MW from 2016 through 2019, while new solar capacity could total 59,200 MW from 2016 through 2021, BNEF said.

“The ITC extension currently written into the omnibus spending bill will result in a [20,000 MW] annual solar market in the U.S. by 2020,” GTM Research Senior Vice President Shayle Kann said in a Dec. 16 news release. “At that rate, more solar will be installed each year than was added to the grid cumulatively through 2014.”

GTM Research is projecting 25,000 MW of additional solar capacity would be built over the next five years if the ITC is extended, or 54% more than would be added in a base case scenario. The firm said an extension could attract about $40 billion in incremental investments in solar in the U.S. between 2016 and 2020.

In the solar sector, utility-scale developers would be the biggest winners, GTM Research said. “Given price trends in the utility solar sector, the five-year ITC extension will likely result in utility-scale solar contracts being signed for less than 4 cents per kilowatt-hour regularly over the next two years,” GTM Research Senior Analyst Cory Honeyman said in a news release.

IHS said extending the ITC would lead to the addition of between 13,000 MW and 16,000 MW of new solar capacity in 2017, compared to 6,500 MW without an extension. Further, the extension could allow developers to grow the pipeline of U.S. solar projects, which currently totals about 58,000 MW, at a rate of about 15,000 MW per year, IHS said.

Andrew Engblom contributed to this article.

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