As much as a third of US wind projects counted as under construction and scheduled to come online before the end of 2015 could fall by the wayside because of difficulty securing financing and too aggressive bidding for power purchase contracts.
Projects had to begin construction by the end of 2013 to qualify for the $0.023/kWh US federal production tax credit, either by spending 5% of total project costs or actually starting physical work on the project.
As much as 4GW chose the latter path and are now in a grey area where there is uncertainty whether they did enough. "It now appears banks and tax equity investors are not comfortable enough with that physical work evaluation to be able to finance on that basis," Keith Martin of the law firm Chadbourne and Parke said during the American Wind Energy Association's (AWEA) annual conference in Las Vegas.
Another challenge is that developers may have been too aggressive in trying to lock down power purchase agreements (PPAs) before the PTC expiry. "With a PTC deadline looming people took a lot of risk," Duncan Koerbel, CEO of Suzlon’s North American arm, said during a turbine manufacturers panel.
"The tag line is there is more wind under construction in the US now than anytime in history. But there are lot of deals out there that are pretty thin. I think you are going to see people out there who say we have a PPA, we took a risk, and the guys in this panel are going to say we can help you so much, but we can’t go that far."
Koerbel believes a large chunk of the 11GW under construction at the end of 2013 will ultimately not pass muster.
"I would bet you’d see at least a 30% fallout."