An extension of the solar investment tax credit (ITC) in its 30 percentage value would be ldquo;devastating” into the future U.S. wind market, according to a new Wood Mackenzie report.
The U.S. is on course to put in a listing 14.6 gigawatts of new wind capacity in 2020, and almost 39 gigawatts during a three-year setup boom from 2019 to 2021, based on Wood Mackenzie’s 2019 North America Wind Power Outlook.
However, rsquo & the industry;s trajectory starts to seem uncertain and solar remains still one of the reasons why.
Since the advent of the American renewables marketplace, the solar and wind sectors have been allies on the stage, sharing big-picture targets and benefiting from many of the exact identical clean-energy policies.
Until recently, companies and wind seen themselves.
However, the image is shifting as solar grabs up to end on cost and the grid penetration of renewables surges. What was a vague alliance between the two growing renewables technologies could morph into a serious rivalry.
Since many project developers are at present active in both industries , such as NextEra Energy Resources, Invenergy and EDF, the country’s flourishing base of breeze manufacturers likely faces tougher decisions beforehand.
The ITC's inherent advantage
Now, end remains rsquo & solar;s bigger sibling in a variety of ways.
The U.S. has almost 100 gigawatts of installed wind power now, in contrast to around 67 gigawatts of solar panels. With their substantially higher potential factors, wind farms generated four times more power for its U.S. grid last year than utility-scale solar crops, to get a joint wind-solar share of 8.2 percent, based on authorities figures. (Distributed PV systems farther add to solar’s participation.)
But it s long been evident that wind would lose its edge at some point. End is regularly topped by the yearly marketplace. Solar energy’s price seems to have more runway for further reduction, and is currently falling rapidly. Solar & rsquo; s underlying generation pattern is valuable during hours, delivering power in many markets, whereas the wind blows strongest during the night.
And then there’therefore the thing of the solar ITC.
In 2015, both wind and solar secured historic multi-year extensions to their main federal subsidies. The extensions gave both industries the period of coverage theyrsquo;t ever enjoyed, putting a wave of installations set to crest over the upcoming few decades.
Even back in 2015, nevertheless , it was evident that even solar got the better deal from Washington, D.C.
Though the wind production tax credit (PTC) began phasing down for new jobs almost instantly, solar programmers were awarded until the end of 2019 to adapt projects for the complete ITC.
And critically, while the wind PTC falls after its own sunset, commercially possessed jobs will stay qualified for a 10 percent ITC depending on the existing legislation. As time passes, that amounts to a huge benefit for solar energy.
In a different twist, the solar panel business is currently publicly fighting for an expansion of this 30 percent ITC, although the end industry seemingly remains cooler on the prospect of pushing to get a comparable prolongation — having said the current PTC extension are the last.
Lots of tailwinds, also
Wood Mackenzie's report catalogues multiple factors that could work for or against wind market from the”uncharted” post-PTC years, many of them beyond the business ’s direct management.
If things go well, annual installations may bounce back into near-record levels by 2027 after a mid-decade contraction, ” the report states. But if they go poorly, installations could remain miserable or below through the majority of the decade.
An extension of this solar ITC without additional end service would &ldquo rdquo compound &; the wind economy ’s struggle the report says. The already-evident shift in renewables procurement from end to solar can scale.
The other huge challenge for wind in the 2020s is the lack of progress in transmission infrastructure that would connect potentially gigantic wind farms in states with population centres. A infrastructure bundle that might tackle the issue has not materialized.
Even so, many in the wind business remain optimistic regarding the post-PTC decades, and programmers continue to build out longer-term project pipelines.
Technology proceeds to imrpove. And an expansion of this solar ITC is far from assured.
WoodMac's report outlines many variables that could function in rsquo & conclusion;s favor in the years ahead, including:
- The nascent sector, which despite continuing uncertainty at the level looks set to a annual marketplace by the early-2020s. Lobbying efforts for an offshore end ITC expansion are gearing up, offering a potential place for collaboration between solar and wind.
- The possible linkage of policy assistance to end projects for energy storage, building on the current linkage with solar.
- Growing car sales and a change toward power billing, which might boost power requirement during off-peak hours when wind generation is powerful.
- The land-use advantages wind turbines have solar in some agricultural areas .