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The U.S. Wind Energy Production Tax Credit – time for a change

The U.S. Wind Energy Production Tax Credit – time for a change

Report summary

The wind energy Production Tax Credit (PTC) has driven expansive development of wind power in the United States.  However, more recently the PTC has skewed wind deployment into areas that probably didn’t need it, while shortchanging other areas.  In some areas excess wind power is disrupting power markets.  With tax policy support scheduled to decline for both the wind and solar industries, a reasonable joint extension policy should recognize that they do not need perpetual support.

What's included?

This report includes 1 file(s)

  • The U.S. Wind Energy Production Tax Credit – time for a change PDF - 680.85 KB 16 Pages, 0 Tables, 10 Figures

Description

This Power Markets Insight report highlights the key issues surrounding this topic, and draws out the implications for those involved.

For participants, suppliers and advisors who want to look at the trends, risks and issues within the power industry, this report gives you an expert opinion and analysis to help inform your decision making.

Wood Mackenzie's detailed analysis and reliable market forecasts provide a strong reference, enabling a quick and concise description about the relationship between this event and its implications.

Underpinned by our extensive gas, coal and oil markets research, Wood Mackenzie's detailed analysis and reliable market forecasts provide a reliable foundation for investments and corporate planning. We help you understand key regulatory and economic drivers, and emerging industry trends in the power industry.

  • Key Takeaways
  • Introduction
  • Historical trends in wind power development and pricing
  • The wind PTC subsidy is actually “growing”, but unequally
  • Big winners of the recent PTC extensions
  • Market impacts of the PTC gold rush
  • Unintended consequences and buyer’s remorse?
  • It is time to replace the wind PTC with a phased-out ITC for all “mature” renewable technologies, plus additional support for “immature” technologies

In this report there are 10 tables or charts, including:

  • Key Takeaways
  • Introduction
  • Historical trends in wind power development and pricing
    • Figure 1 Historical Wind PPA Prices 1996-January 2014
    • Figure 2 Location of U.S. wind farms operational after mid-2013 or under construction
  • The wind PTC subsidy is actually “growing”, but unequally
    • Figure 3 Wind PTC revenue as a percentage of unsubsidized levelized costs
  • Big winners of the recent PTC extensions
    • Figure 4 Estimated State PTC Revenues From Recent and Under Construction Wind Farms
  • Market impacts of the PTC gold rush
    • Figure 5 MISO-MidAmerican Zone Real-time Prices and Weighted Wind Revenue
    • Figure 6 Correlation between hourly MISO wind generation and MidAmerican Implied Heat Rates
    • Figure 7 ERCOT HUB Real-time Prices and Weighted Wind Revenue
    • Figure 8 Correlation between hourly ERCOT wind generation and ERCOT Implied Heat Rates
  • Unintended consequences and buyer’s remorse?
    • Figure 9 H1 LTO historical and forecast capacity prices for selected Midwest zones (2015 $/kW-yr)
  • It is time to replace the wind PTC with a phased-out ITC for all “mature” renewable technologies, plus additional support for “immature” technologies
    • Figure 10 Estimated wind LCOE using PTC versus using 25% ITC
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