United States

United States

US solar relief extension would 'devastate' wind

Onshore wind power will be disadvantaged when its key support mechanism in the US expires next year, while solar PV retaining a tax deduction will make it more competitive, analysts believe.

6.6GW of wind projects due online in 2020 might be pushed back a year, while 1.5GW might be scrapped altogether (pic credit: AWEA)
6.6GW of wind projects due online in 2020 might be pushed back a year, while 1.5GW might be scrapped altogether (pic credit: AWEA)

The US government approved the extension and five-year phase-out of the support scheme for the wind power industry, the production tax credit (PTC), in 2015.

Developers will receive 40% of the original $0.023/kWh PTC for a project’s output if they start construction in 2019, but will receive no federal support beyond the end of the year.

By comparison, utility-scale solar PV developers can currently deduct 30% of the cost of installation from federal taxes under the investment tax credit (ITC) scheme

However, solar PV’s ITC is being scaled down to 10% by 2022, but beyond then, developers can continue claim a 10% tax deduction.

Senior analyst at Wood Mackenzie, Anthony Logan, argues this gives the technology a "marginal advantage" over wind.

However, a recent solar PV industry push to lobby for an extension of the 30% ITC would prove "devastating" for wind power beyond 2021, he added.

Onshore wind power will remain competitive in key states through 2021, Wood Mackenzie forecasts, but the cost impact of the PTC’s 60% and 40% reductions from the original value will outpace the technology’s cost reductions in 2022 and 2023.

Delays and cancellations

Wood Mackenzie forecasts US onshore wind additions to peak at 14.6GW in 2020, fall slightly to 12.3GW in 2021, before bottoming out at 5.9GW in 2024.

However, up to 8.1GW of US projects also set for completion in 2020 could be delayed or cancelled due to logistical bottlenecks and interconnection queues as developers scramble to claim the expiring PTC.

Analysts at Wood Mackenzie forecast these will cause 6.6GW of projects scheduled for completion in 2020 not to be connected to the grid until the following year, while developers will pull the plug on about 1.5GW of projects.

Developers scrambling to secure specialised trailer and railcar fleets to transport turbines, blades, towers and other wind power components will also delay projects or jeopardise their financial viability, the analysts report.

Senior analyst Anthony Logan added project delays will become more apparent in the first two quarters of 2020, as developers’ project schedules overlap.

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