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US wind expansion to grow, says Fitch

UNITED STATES: The US is very likely to implement President Obama's Clean Power Plan (CPP) or similar laws boosting the uptake of low-carbon energy, said credit rating agency Fitch Ratings.

Fitch expects US wind to be boosted by the PTC and the Clean Power Plan or similar legislation
Fitch expects US wind to be boosted by the PTC and the Clean Power Plan or similar legislation

Fitch made these predictions in a new report on the US, Smooth Sailing Ahead for Wind Power. Fitch is classed as one of the "big three" credit rating agencies, along with Moody's and Standard and Poor.

"Fitch expects wind power will continue its rapid expansion now that the greatest risk, the expiry of the PTC [production tax credit], has been averted," the report said.

The PTC, which has been extended for five years, accounts for about one third of a wind project's economics, according to Fitch.

"Declining governmental subsidies could cause headwinds [in the] longer term, particularly if natural gas prices and electricity demand remain depressed, thereby constraining wholesale energy prices," the agency warned.

Even so, state renewable portfolio standards alone will require almost a doubling of renewable energy's share of the US retail load by 2030, it said.

Fitch estimates that wind projects with a capacity factor of 50% and capital costs of $1,600/kWh can generate unlevered rates of return of about mid-$30s/MWh, inclusive of the PTC.

The CPP was delayed by the US Supreme Court in February.

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