Wind Capacity Adds Could Fall 5 GW if PTC Not Extended

The Energy Department’s National Renewable Energy Laboratory analysis of the production tax credit (PTC) shows that it has been critical to the development of the wind power industry and the deployment of wind generation in the United States.

Implications of a PTC Extension on US Wind Deployment was recently released.

From 2006 to 2012, wind power capacity has grown at an average annual rate of about 30 percent, and the costs of new installed wind have dropped by 22 percent. Components supplied for wind turbines from domestic manufacturers have risen to more than 70 percent of equipment installed at US wind farms, up from 25 percent in 2006.

The PTC provides a tax credit for every unit of energy produced by a qualifying facility for the first 10 years of commercial operation.

The study found:

• Under a scenario in which the production tax credit is not extended and all other policies remain unchanged -- and in which, as anticipated, there is little to no growth for electricity in the US -- wind capacity additions are projected to fall to between 3 GW and 5 GW per year from 2013 through 2020.
• Reduced domestic wind power deployment is likely to have a direct and negative effect on US-based wind turbine manufacturing production and employment.
• Production tax credit extension options that would ramp down and end by 2022 appear to be insufficient to support recent levels of deployment.
• Of the scenarios considered in the report, extending the production tax credit at its historical level could provide the best opportunity to sustain strong US wind energy installation and domestic manufacturing.

The Senate has passed a two-year extension of the PTC, retroactive to January, but the House has not yet taken up the legislation.