- Wind companies caught in the uncertainty of whether Congress will extend the production tax credit (PTC) continue to negotiate power purchase agreements (PPAs) with utilities and other off-takers based on financing assumptions that include the federal incentives, according to SNL.
- The $0.023/kWh federal tax credit expired at the end of 2014 and, though the Senate Finance Committee voted 23-3 in July to extend the PTC as part of a larger tax bill, House Republicans are pushing against its inclusion in a final bill.
- Sidley Austin Attorney Robert Stephens told SNL developers must negotiate deals on the assumption that PTC will be extended, or lose ground to competitors. But if they are betting wrong, and the tax credits don't come back, they could have to mothball projects.
When Congress failed to extend the PTC in 2013, development fell 92% and 30,000 wind industry jobs were lost. The 2014 restoration brought back 23,000 jobs, according to the wind industry.
Now wind developers, eager to offer the best prices possible, are reportedly betting that congress will restore it again and building those assumptions into their product planning and PPA prices.
In addition to competitive incentives, a wind developer recently told Utility Dive the optimism over extension that informs current project planning is also based on the fact that about 70% of congressional districts have wind turbines, wind manufacturing facilities, or both.
Because House Republican bills would either eliminate the PTC and transfer the expense to reduce corporate taxes or simply phase out the PTC by 2026, wind industry lobbyists are concentrating their efforts on bills originating in the Senate and hoping the incentives won't be removed when the House votes on them.
Extension of the incentive package that includes the PTC could come with an expected October vote on the highway trust fund, one in November on the federal debt ceiling, or an expected December vote on a continuing resolution for government funding.
Scott Weiss, a spokesperson for wind developer Apex Clean Energy, told SNL the wind industry would survive without the PTC, but would look very different without it. He named Texas as one market that would continue strong growth.