Production Tax Credits Are Still a Massive Success

According to ‘Developers in the US Safe Harbor 6.6GW of Wind Turbine Equipment in 2018’, more than 55GW of equipment developers qualified through safe harbor investments in 2016 and 2017. The number for 2018 is an encouraging signal that offers upside to the outlook in 2022 when projects must be online.

Commenting on the research, Luke Lewandowski, Wood Mackenzie Power & Renewables Research Director, said: “Despite the PTC phase-out, the relative stability of the US market compared to more volatile international markets, along with the security and ability to monetize 10 years of tax credits continues to attract long-standing investors in the US wind power market, as well as newcomers to the market. Despite an abundance of qualified equipment at higher subsidy levels, a diverse field of developers invested in 60% safe harbor equipment last year, indicating optimism over the general competitiveness of wind power from a cost perspective in 2022.”

The research also revealed that wind asset owners in the US have repowered more than 3GW of capacity under the 80-20 provision over the last two years. “With nearly 13GW of wind power capacity installed in 2012 alone, not to mention turbines of an older vintage not yet repowered, opportunity for repowering via the 80-20 provision stimulated interest in safe harbor investment - even at 60% PTCs.

According to the report, 2022 wind power market potential will hinge on lowering wind power’s cost of energy. Direct competition between wind and solar power will intensify in 2022 as solar projects coming online in the same year will be able to capitalize on the 30% investment tax credit (ITC) if project construction commenced or if the developer has incurred at least 5% of the cost of the facility before 31^st  December 2019.

The report highlights that wind turbine equipment costs are also anticipated to fall. Although tariffs on steel and wind components from China may still be in place by 2022, mitigation strategies will have matured to allow some cost savings. Many of the new turbine models scheduled for installation in 2019 and 2020 will have reached serial production by 2022.