This document summarizes the impact of the production tax credit (PTC) on the U.S. wind energy market. It finds that the pending expiration of the PTC at the end of 2012 is creating a short-term surge in wind project development and investment. However, wind installations are expected to drop significantly to 1-2 GW in 2013 if the PTC is not extended, compared to 2-4 GW if it is extended. The availability and duration of an extended PTC would impact both near-term wind development and long-term projections. Other factors like state renewable policies, electricity demand, and natural gas prices also influence wind markets. Congress will decide by the end of 2012 whether to allow the PTC to
The document provides comments from the American Council On Renewable Energy (ACORE) on the EPA's proposed Carbon Pollution Emission Guidelines. ACORE recommends improvements to better incentivize states to meet emission reduction targets through increased renewable energy deployment. Specifically, ACORE suggests modifying interim targets, setting state-specific renewable energy goals, giving states credit for early renewable energy adoption, and adopting a higher projected growth rate for renewable energy that reflects its recent acceleration.
The document provides an overview of EPA's proposed Clean Power Plan (CPP) under Section 111(d) of the Clean Air Act. Key points:
1) The CPP aims to reduce carbon emissions from existing power plants 30% by 2030 from 2005 levels through four "building blocks" including efficiency improvements, switching to natural gas, renewables, and demand reduction.
2) States must submit plans by 2016 describing how they will meet individualized emission reduction targets using these building blocks. Plans will be evaluated on criteria like enforceability and meeting interim goals.
3) Implementation is uncertain as the final rule is still to come in 2015 and legal challenges are expected from utilities and states over issues like costs,
This Report was prepared pursuant to a contract with Allegheny Science & Technology Corporation with funding from the U.S. Department of Energy (“DOE”), Office of Nuclear Energy, under Small Modular Reactor Report, MSA No. DOE0638-1022-11, Prime Contract No. DE-NE0000638.
This Report does not represent the views of DOE, and no official endorsement should be inferred. Additionally, this Report is not intended to provide legal advice, and readers are encouraged to consult with an attorney familiar with the applicable federal and state requirements prior to entering into any agreements for the purchase of power.
The authors of this Report are Seth Kirshenberg and Hilary Jackler at Kutak Rock LLP and Brian Oakley and Wil Goldenberg at Scully Capital Services, Inc. The authors gratefully acknowledge the assistance of federal government officials working to support the small modular reactor program and the development of nuclear power. DOE provided the resources for this Report and invaluable leadership, guidance, and input.
In particular, the authors appreciate the leadership, support, guidance, and input from Matt Bowen, Associate Deputy Assistant Secretary, Office of Nuclear Energy, and Tim Beville, Program Manager, Small Modular Reactors Program at DOE. Additionally, the authors appreciate the input and guidance from the Western Area Power Administration, the Utah Associated Municipal Power Systems, NuScale Power LLC, and the many other governmental entities and individuals that reviewed and provided input and technical guidance on the drafts of this Report.
https://www.energy.gov/sites/prod/files/2017/02/f34/Purchasing%20Power%20Produced%20by%20Small%20Modular%20Reactors%20-%20Federal%20Agency%20Options%20-%20Final%201-27-17.pdf
Frank Hoffman's Presentation RE: 1603 Grant ProgramLeslie Feeney
This document provides background information on the Recovery Act Section 1603 Renewable Energy Grant-In-Lieu-Of-Tax-Credit Program. It discusses how the program was created in 2009 to promote renewable energy development when the tax equity market collapsed. The program allows developers of renewable energy projects to receive a grant from the Treasury Department for 30% of eligible project costs, instead of the federal renewable electricity production tax credit. As of November 2010, over $5 billion in grants had been awarded, with the majority going to wind energy projects. The document also discusses how Congress had previously attempted to support renewable energy through production tax credits, but their intermittent extension led to volatility in renewable energy installations.
The passage discusses how the outlook for renewable energy financing in the US is changing due to the expiration of key federal support programs. Specifically, it notes that the expiration of the Department of Energy Loan Guarantee Program and Treasury Cash Grant Program will make financing renewable energy projects much more difficult. It also expects growth in renewable energy capacity to decline dramatically without this significant federal support. While some incentives will still exist, the passage argues they will be insufficient to sustain recent investment levels in renewable energy generation.
DOD Purchase of Renewable Energy Credits Under the National Defense Authoriza...Anthony Andrews
The document discusses the Department of Defense's (DOD) electricity usage and the National Defense Authorization Act's directive for DOD to purchase renewable energy certificates (RECs) in bulk. It provides background on federal renewable energy policies and requirements. DOD consumed around 24,765 thousand megawatt-hours of electric power in 2010. The document estimates DOD's state-by-state electricity demand and discusses how REC purchases could help DOD meet renewable energy goals, though some argue REC purchases without associated power do not contribute to energy security.
How cleantech can close the financing gaptonymaull92
The most fundamental element of disruptive business models is financing. the article explores creating, adopting and adapting proven models for new industries.
The ScottMadden Energy Industry Update - Winter 2012-2013ScottMadden, Inc.
This semi-annual publication features ScottMadden’s view of significant events and emerging trends in the industry and is received by thousands of industry leaders. Themed “Decision Time,” this Update surveys the energy and utility business environment in the wake of U.S. elections in November 2012. The results provided some, but not complete, political and regulatory resolution.
The document provides comments from the American Council On Renewable Energy (ACORE) on the EPA's proposed Carbon Pollution Emission Guidelines. ACORE recommends improvements to better incentivize states to meet emission reduction targets through increased renewable energy deployment. Specifically, ACORE suggests modifying interim targets, setting state-specific renewable energy goals, giving states credit for early renewable energy adoption, and adopting a higher projected growth rate for renewable energy that reflects its recent acceleration.
The document provides an overview of EPA's proposed Clean Power Plan (CPP) under Section 111(d) of the Clean Air Act. Key points:
1) The CPP aims to reduce carbon emissions from existing power plants 30% by 2030 from 2005 levels through four "building blocks" including efficiency improvements, switching to natural gas, renewables, and demand reduction.
2) States must submit plans by 2016 describing how they will meet individualized emission reduction targets using these building blocks. Plans will be evaluated on criteria like enforceability and meeting interim goals.
3) Implementation is uncertain as the final rule is still to come in 2015 and legal challenges are expected from utilities and states over issues like costs,
This Report was prepared pursuant to a contract with Allegheny Science & Technology Corporation with funding from the U.S. Department of Energy (“DOE”), Office of Nuclear Energy, under Small Modular Reactor Report, MSA No. DOE0638-1022-11, Prime Contract No. DE-NE0000638.
This Report does not represent the views of DOE, and no official endorsement should be inferred. Additionally, this Report is not intended to provide legal advice, and readers are encouraged to consult with an attorney familiar with the applicable federal and state requirements prior to entering into any agreements for the purchase of power.
The authors of this Report are Seth Kirshenberg and Hilary Jackler at Kutak Rock LLP and Brian Oakley and Wil Goldenberg at Scully Capital Services, Inc. The authors gratefully acknowledge the assistance of federal government officials working to support the small modular reactor program and the development of nuclear power. DOE provided the resources for this Report and invaluable leadership, guidance, and input.
In particular, the authors appreciate the leadership, support, guidance, and input from Matt Bowen, Associate Deputy Assistant Secretary, Office of Nuclear Energy, and Tim Beville, Program Manager, Small Modular Reactors Program at DOE. Additionally, the authors appreciate the input and guidance from the Western Area Power Administration, the Utah Associated Municipal Power Systems, NuScale Power LLC, and the many other governmental entities and individuals that reviewed and provided input and technical guidance on the drafts of this Report.
https://www.energy.gov/sites/prod/files/2017/02/f34/Purchasing%20Power%20Produced%20by%20Small%20Modular%20Reactors%20-%20Federal%20Agency%20Options%20-%20Final%201-27-17.pdf
Frank Hoffman's Presentation RE: 1603 Grant ProgramLeslie Feeney
This document provides background information on the Recovery Act Section 1603 Renewable Energy Grant-In-Lieu-Of-Tax-Credit Program. It discusses how the program was created in 2009 to promote renewable energy development when the tax equity market collapsed. The program allows developers of renewable energy projects to receive a grant from the Treasury Department for 30% of eligible project costs, instead of the federal renewable electricity production tax credit. As of November 2010, over $5 billion in grants had been awarded, with the majority going to wind energy projects. The document also discusses how Congress had previously attempted to support renewable energy through production tax credits, but their intermittent extension led to volatility in renewable energy installations.
The passage discusses how the outlook for renewable energy financing in the US is changing due to the expiration of key federal support programs. Specifically, it notes that the expiration of the Department of Energy Loan Guarantee Program and Treasury Cash Grant Program will make financing renewable energy projects much more difficult. It also expects growth in renewable energy capacity to decline dramatically without this significant federal support. While some incentives will still exist, the passage argues they will be insufficient to sustain recent investment levels in renewable energy generation.
DOD Purchase of Renewable Energy Credits Under the National Defense Authoriza...Anthony Andrews
The document discusses the Department of Defense's (DOD) electricity usage and the National Defense Authorization Act's directive for DOD to purchase renewable energy certificates (RECs) in bulk. It provides background on federal renewable energy policies and requirements. DOD consumed around 24,765 thousand megawatt-hours of electric power in 2010. The document estimates DOD's state-by-state electricity demand and discusses how REC purchases could help DOD meet renewable energy goals, though some argue REC purchases without associated power do not contribute to energy security.
How cleantech can close the financing gaptonymaull92
The most fundamental element of disruptive business models is financing. the article explores creating, adopting and adapting proven models for new industries.
The ScottMadden Energy Industry Update - Winter 2012-2013ScottMadden, Inc.
This semi-annual publication features ScottMadden’s view of significant events and emerging trends in the industry and is received by thousands of industry leaders. Themed “Decision Time,” this Update surveys the energy and utility business environment in the wake of U.S. elections in November 2012. The results provided some, but not complete, political and regulatory resolution.
public serviceenterprise group LehmanConferencefinance20
Public Service Enterprise Group presented at a conference on global warming solutions. They discussed New Jersey's draft Energy Master Plan which aims to reduce energy consumption 20% by 2020 through efficiency, reduce peak demand 5,700 MW, and meet 22.5% of electricity needs through renewable sources like solar and wind. PSE&G outlined their role in supporting these goals through energy efficiency programs, investing over $100 million in solar energy, and providing loans for customers to install solar panels.
- Spencer Dale introduces the 2020 bp Energy Outlook launch and three scenarios explored: Rapid, Net Zero, and Business-as-Usual (BAU).
- Common across all three scenarios are: a declining role for fossil fuels from 85% to 65-20% by 2050; renewable energy growing from 5% to 20-60% of primary energy by 2050; and increasing electrification with the share of electricity in final energy consumption rising over time.
- Key questions to be discussed include: the impacts of Covid-19; prospects for oil demand; roles of natural gas, renewables, hydrogen, and bioenergy; and dangers of delaying the energy transition.
The document summarizes key trends in the solar energy sector from 2009-2010, during the economic downturn. It discusses how the extension of tax credits in stimulus packages benefited existing solar projects but made financing new projects difficult due to lack of profits. While subsidies are expected to drive long-term growth, the $117.6 million allocated in stimulus funds was not seen as an impressive amount. The document also reviews trends in the credit market, state budgets, residential foreclosures and outlines provisions of legislation renewing solar tax credits through 2016.
The DOE aims to balance renewable energy development with increasing reliance on fossil fuels like coal in the short term. It plans to finalize feed-in tariff rates and renewable portfolio standards in 2011 to encourage more renewable investments. However, the DOE expects renewable energy's share of the country's generation mix may decline in the next five years as more coal plants are built. The government will likely focus on developing the country's coal resources to ensure energy supply, which could slow the growth of wind and solar power development until the energy supply is stabilized. The DOE faces the challenge of setting policies that incentivize renewable investments without unduly increasing costs for consumers.
The document outlines BP's new strategy presented at its 2020 Capital Markets Day, including reducing oil and gas production 40% by 2030, developing 50GW of renewable capacity by 2030, and allocating over 20% of capital to energy transition by 2025. BP also introduces a new financial framework to support the energy transition with commitments around debt reduction, shareholder distributions, returns, and earnings growth through 2025. A question and answer section addresses investor questions about various aspects of BP's new strategy and ambitions.
The document summarizes the extreme price spikes in the PJM wholesale power market during January 2014 due to a polar vortex event. Delivered natural gas prices in eastern markets reached record levels over $100/MMBtu, while gas at the Henry Hub benchmark was under $5/MMBtu. This caused wholesale power prices to exceed PJM's generator offer cap of $1,000/MWh, endangering reliability. The price spikes were caused by constraints on pipeline capacity limiting gas supply for gas-fired power plants during peak winter demand. The events highlighted the need for policies ensuring adequate planning and pricing signals for reliable winter operations.
This webinar addresses the key industry trends impacting transmission development, FERC Order 1000 and the impacts of the removal of the right of first refusal for transmission developers.
This document provides an overview and update on Integrys Energy Group for August 2008. It discusses forward-looking statements and risks, Integrys' vision and regulated utilities business, key investments and projects including American Transmission Company and Weston 4, upcoming regulated utility rate cases, and prospects for future growth. Integrys serves over 2 million utility customers across the Midwest and has nonregulated energy services operating in the Northeast US and parts of Canada.
The document provides an analysis of the power sector in India over the last decade. It finds that while private investment and generation capacity increased significantly, the sector still faces major financial stress affecting both public and private entities. Key issues include high distribution losses, increasing debt levels, stranded generation assets due to lack of fuel, and high costs associated with diesel backup generation. Going forward, immediate measures are needed to address fuel supply issues for stranded projects, improve the power procurement process, and restructure discom debt. Long term reforms are also required to bring stability and sustainability to the sector.
This is the booklet that accompanies BP's Energy Outlook 2030 presentation.
We hope that sharing this outlook contributes to the wider debate on global energy issues. It identifies long-term energy trends, building on our Statistical Review of World Energy, and then develops projections for world energy markets to 2030, taking account of the potential evolution of the world economy, policy, and technology.
The outlook reflects a ‘to the best of our knowledge’ assessment of the world’s likely path from today’s vantage point, drawing on expertise both within and outside the company. It is not a statement about how we would like the market to evolve.
The outlook highlights the growing role of developing economies in global energy consumption, and the increasing share of non-fossil fuels in global energy supply. It emphasizes the importance of both improving energy efficiency and expanding energy supplies to meet the energy needs of billions of people who aspire to better lifestyles, and doing so in a way that is sustainable and secure. This year’s edition has a special focus on the role of shale gas and tight oil in supporting the growth of gas and oil supply. It also notes the uncertainties attached to any long term projection. The discipline of building a numerical projection sharpens our thinking, but the precise numbers are less important than the underlying story of the challenges we all face and the choices we make in producing and consuming energy.
For more information and to download summary tables in Excel format, please visit: http://bit.ly/BPEO2013
- The document provides an update on business performance and outlook for Edison International and its subsidiary Southern California Edison.
- It discusses SCE's historical and projected rate base growth of 7-8% annually through 2023, which is expected to drive long-term earnings growth.
- Key drivers of rate base growth include infrastructure replacement, grid modernization, transportation electrification, energy storage, transmission investments, and wildfire prevention and mitigation activities.
- Temperatures regularly drop below freezing in Albany, New York during winter, creating challenges for water treatment equipment at a power station. The clarifier unit that is important for water treatment tends to freeze.
- Joe Ruggiero, a senior environmental engineer, came up with a solution to prevent the clarifier from freezing by recycling heated blowdown water from heat recovery steam generator units to warm the clarifier.
- Implementing this approach would have multiple benefits - it would considerably reduce discharge to the nearby river by reusing the blowdown water, help ensure reliable station operations, and be better for the environment.
The document provides information on legislative activities for the week of July 9, 2012. It summarizes bills scheduled for consideration in the House and Senate that week related to veterans, the farm bill, appropriations, cybersecurity, and education issues. It also outlines regulatory actions and hearings scheduled related to education issues like No Child Left Behind waivers and the gainful employment ruling.
This document provides an analysis of Alliant Energy Corporation (LNT). Key points include:
- LNT is a regulated utility holding company providing electricity and natural gas to customers in Iowa, Minnesota, and Wisconsin.
- The analyst issues a HOLD recommendation with a $73 target price, believing the stock is fairly priced but not reflecting potential value from natural gas expansion.
- Key investment drivers for LNT are its dividend yield, natural gas expansion opportunities, rate base growth, and a supportive regulatory environment.
DTE Energy raised its 2008 earnings guidance based on strong expected performance across several business segments. It reported first quarter 2008 operating earnings of $128 million, up from $112 million in the first quarter of 2007, driven by higher earnings at its energy trading business. Several business segments experienced improved results compared to the prior year quarter. The company also advocated for comprehensive energy reform legislation in Michigan to secure clean energy supplies and jobs.
Iraq\'s power crisis, and the need to re-engage the private sector (smartly) to address the problem. Oped piece published in Middle East Economic Survey February 2012.
Why Policy Matters - Renewable Energy Market Momentum at Risk - June 2015Scott Clausen
The U.S. has implemented policies that have successfully attracted hundreds of billions of dollars in private investment to the renewable energy sector. This investment has enabled rapid scaling of the industry and significant cost reductions. However, continuing uncertainty around policies like the PTC and ITC is jeopardizing future investment and growth in the renewable energy sector by making long-term planning difficult. Extending these policies would provide certainty and allow the U.S. renewable energy momentum to continue.
The document provides an overview of EPA's proposed Clean Power Plan (CPP) under Section 111(d) of the Clean Air Act. Key points:
1) The CPP aims to reduce carbon emissions from existing power plants 30% by 2030 from 2005 levels through four "building blocks" including efficiency improvements, switching to natural gas, renewables, and demand reduction.
2) States must submit plans by 2016 describing how they will meet individualized emission rate targets using these tools. Plans will be evaluated on criteria like enforceability and meeting interim goals.
3) Implementation is uncertain as the final rule is still to come in 2015 and legal challenges are expected from utilities and states over issues like costs, authority
Softer Solar Landings: Options to Avoid the Investment Tax Credit CliffGW Solar Institute
This document analyzes the potential impacts of allowing the 30% federal investment tax credit (ITC) for solar energy to expire at the end of 2016 as scheduled under current law. It finds that failure to extend the ITC could result in a 10% or greater increase in the cost of solar energy from 2016 to 2017, along with 42% fewer utility-scale solar installations and 15% fewer distributed solar installations in 2017. It considers several policy options Congress could pursue to mitigate these impacts, recommending a two-year extension of the current ITC levels followed by a gradual phase-out as solar and other technologies reach full market maturity and scale.
The stimulus package included provisions aimed at easing capital constraints and incentivizing renewable energy deployment. While initial impact was muted, the long-term forecast remains promising. Key programs include cash grants of 30% of project costs and expanded loan guarantee programs, both of which are now accepting applications. Concerns include delays in program launch and complexity of requirements, but expectations are that the stimulus measures will significantly boost renewable energy deployment over the long run.
public serviceenterprise group LehmanConferencefinance20
Public Service Enterprise Group presented at a conference on global warming solutions. They discussed New Jersey's draft Energy Master Plan which aims to reduce energy consumption 20% by 2020 through efficiency, reduce peak demand 5,700 MW, and meet 22.5% of electricity needs through renewable sources like solar and wind. PSE&G outlined their role in supporting these goals through energy efficiency programs, investing over $100 million in solar energy, and providing loans for customers to install solar panels.
- Spencer Dale introduces the 2020 bp Energy Outlook launch and three scenarios explored: Rapid, Net Zero, and Business-as-Usual (BAU).
- Common across all three scenarios are: a declining role for fossil fuels from 85% to 65-20% by 2050; renewable energy growing from 5% to 20-60% of primary energy by 2050; and increasing electrification with the share of electricity in final energy consumption rising over time.
- Key questions to be discussed include: the impacts of Covid-19; prospects for oil demand; roles of natural gas, renewables, hydrogen, and bioenergy; and dangers of delaying the energy transition.
The document summarizes key trends in the solar energy sector from 2009-2010, during the economic downturn. It discusses how the extension of tax credits in stimulus packages benefited existing solar projects but made financing new projects difficult due to lack of profits. While subsidies are expected to drive long-term growth, the $117.6 million allocated in stimulus funds was not seen as an impressive amount. The document also reviews trends in the credit market, state budgets, residential foreclosures and outlines provisions of legislation renewing solar tax credits through 2016.
The DOE aims to balance renewable energy development with increasing reliance on fossil fuels like coal in the short term. It plans to finalize feed-in tariff rates and renewable portfolio standards in 2011 to encourage more renewable investments. However, the DOE expects renewable energy's share of the country's generation mix may decline in the next five years as more coal plants are built. The government will likely focus on developing the country's coal resources to ensure energy supply, which could slow the growth of wind and solar power development until the energy supply is stabilized. The DOE faces the challenge of setting policies that incentivize renewable investments without unduly increasing costs for consumers.
The document outlines BP's new strategy presented at its 2020 Capital Markets Day, including reducing oil and gas production 40% by 2030, developing 50GW of renewable capacity by 2030, and allocating over 20% of capital to energy transition by 2025. BP also introduces a new financial framework to support the energy transition with commitments around debt reduction, shareholder distributions, returns, and earnings growth through 2025. A question and answer section addresses investor questions about various aspects of BP's new strategy and ambitions.
The document summarizes the extreme price spikes in the PJM wholesale power market during January 2014 due to a polar vortex event. Delivered natural gas prices in eastern markets reached record levels over $100/MMBtu, while gas at the Henry Hub benchmark was under $5/MMBtu. This caused wholesale power prices to exceed PJM's generator offer cap of $1,000/MWh, endangering reliability. The price spikes were caused by constraints on pipeline capacity limiting gas supply for gas-fired power plants during peak winter demand. The events highlighted the need for policies ensuring adequate planning and pricing signals for reliable winter operations.
This webinar addresses the key industry trends impacting transmission development, FERC Order 1000 and the impacts of the removal of the right of first refusal for transmission developers.
This document provides an overview and update on Integrys Energy Group for August 2008. It discusses forward-looking statements and risks, Integrys' vision and regulated utilities business, key investments and projects including American Transmission Company and Weston 4, upcoming regulated utility rate cases, and prospects for future growth. Integrys serves over 2 million utility customers across the Midwest and has nonregulated energy services operating in the Northeast US and parts of Canada.
The document provides an analysis of the power sector in India over the last decade. It finds that while private investment and generation capacity increased significantly, the sector still faces major financial stress affecting both public and private entities. Key issues include high distribution losses, increasing debt levels, stranded generation assets due to lack of fuel, and high costs associated with diesel backup generation. Going forward, immediate measures are needed to address fuel supply issues for stranded projects, improve the power procurement process, and restructure discom debt. Long term reforms are also required to bring stability and sustainability to the sector.
This is the booklet that accompanies BP's Energy Outlook 2030 presentation.
We hope that sharing this outlook contributes to the wider debate on global energy issues. It identifies long-term energy trends, building on our Statistical Review of World Energy, and then develops projections for world energy markets to 2030, taking account of the potential evolution of the world economy, policy, and technology.
The outlook reflects a ‘to the best of our knowledge’ assessment of the world’s likely path from today’s vantage point, drawing on expertise both within and outside the company. It is not a statement about how we would like the market to evolve.
The outlook highlights the growing role of developing economies in global energy consumption, and the increasing share of non-fossil fuels in global energy supply. It emphasizes the importance of both improving energy efficiency and expanding energy supplies to meet the energy needs of billions of people who aspire to better lifestyles, and doing so in a way that is sustainable and secure. This year’s edition has a special focus on the role of shale gas and tight oil in supporting the growth of gas and oil supply. It also notes the uncertainties attached to any long term projection. The discipline of building a numerical projection sharpens our thinking, but the precise numbers are less important than the underlying story of the challenges we all face and the choices we make in producing and consuming energy.
For more information and to download summary tables in Excel format, please visit: http://bit.ly/BPEO2013
- The document provides an update on business performance and outlook for Edison International and its subsidiary Southern California Edison.
- It discusses SCE's historical and projected rate base growth of 7-8% annually through 2023, which is expected to drive long-term earnings growth.
- Key drivers of rate base growth include infrastructure replacement, grid modernization, transportation electrification, energy storage, transmission investments, and wildfire prevention and mitigation activities.
- Temperatures regularly drop below freezing in Albany, New York during winter, creating challenges for water treatment equipment at a power station. The clarifier unit that is important for water treatment tends to freeze.
- Joe Ruggiero, a senior environmental engineer, came up with a solution to prevent the clarifier from freezing by recycling heated blowdown water from heat recovery steam generator units to warm the clarifier.
- Implementing this approach would have multiple benefits - it would considerably reduce discharge to the nearby river by reusing the blowdown water, help ensure reliable station operations, and be better for the environment.
The document provides information on legislative activities for the week of July 9, 2012. It summarizes bills scheduled for consideration in the House and Senate that week related to veterans, the farm bill, appropriations, cybersecurity, and education issues. It also outlines regulatory actions and hearings scheduled related to education issues like No Child Left Behind waivers and the gainful employment ruling.
This document provides an analysis of Alliant Energy Corporation (LNT). Key points include:
- LNT is a regulated utility holding company providing electricity and natural gas to customers in Iowa, Minnesota, and Wisconsin.
- The analyst issues a HOLD recommendation with a $73 target price, believing the stock is fairly priced but not reflecting potential value from natural gas expansion.
- Key investment drivers for LNT are its dividend yield, natural gas expansion opportunities, rate base growth, and a supportive regulatory environment.
DTE Energy raised its 2008 earnings guidance based on strong expected performance across several business segments. It reported first quarter 2008 operating earnings of $128 million, up from $112 million in the first quarter of 2007, driven by higher earnings at its energy trading business. Several business segments experienced improved results compared to the prior year quarter. The company also advocated for comprehensive energy reform legislation in Michigan to secure clean energy supplies and jobs.
Iraq\'s power crisis, and the need to re-engage the private sector (smartly) to address the problem. Oped piece published in Middle East Economic Survey February 2012.
Why Policy Matters - Renewable Energy Market Momentum at Risk - June 2015Scott Clausen
The U.S. has implemented policies that have successfully attracted hundreds of billions of dollars in private investment to the renewable energy sector. This investment has enabled rapid scaling of the industry and significant cost reductions. However, continuing uncertainty around policies like the PTC and ITC is jeopardizing future investment and growth in the renewable energy sector by making long-term planning difficult. Extending these policies would provide certainty and allow the U.S. renewable energy momentum to continue.
The document provides an overview of EPA's proposed Clean Power Plan (CPP) under Section 111(d) of the Clean Air Act. Key points:
1) The CPP aims to reduce carbon emissions from existing power plants 30% by 2030 from 2005 levels through four "building blocks" including efficiency improvements, switching to natural gas, renewables, and demand reduction.
2) States must submit plans by 2016 describing how they will meet individualized emission rate targets using these tools. Plans will be evaluated on criteria like enforceability and meeting interim goals.
3) Implementation is uncertain as the final rule is still to come in 2015 and legal challenges are expected from utilities and states over issues like costs, authority
Softer Solar Landings: Options to Avoid the Investment Tax Credit CliffGW Solar Institute
This document analyzes the potential impacts of allowing the 30% federal investment tax credit (ITC) for solar energy to expire at the end of 2016 as scheduled under current law. It finds that failure to extend the ITC could result in a 10% or greater increase in the cost of solar energy from 2016 to 2017, along with 42% fewer utility-scale solar installations and 15% fewer distributed solar installations in 2017. It considers several policy options Congress could pursue to mitigate these impacts, recommending a two-year extension of the current ITC levels followed by a gradual phase-out as solar and other technologies reach full market maturity and scale.
The stimulus package included provisions aimed at easing capital constraints and incentivizing renewable energy deployment. While initial impact was muted, the long-term forecast remains promising. Key programs include cash grants of 30% of project costs and expanded loan guarantee programs, both of which are now accepting applications. Concerns include delays in program launch and complexity of requirements, but expectations are that the stimulus measures will significantly boost renewable energy deployment over the long run.
The stimulus package included provisions aimed at easing capital constraints and incentivizing renewable energy deployment. While initial impact was muted, long-term forecasts remain promising. The package provides grants, loan guarantees, and tax incentives to boost renewables. Near-term challenges include complex program guidelines and delays, but future expectations are that improved project economics will drive new investment and deployment above current estimates.
The letter urges the Senate Finance Committee to continue supporting renewable energy through tax policy, which has been crucial to the growth of industries like wind and solar. It summarizes that renewable sources made up over 50% of new US power in 2014, with technologies like wind and solar experiencing major cost reductions thanks to tax credits. However, uncertainty around the extension of credits like the PTC and ITC threatens continued growth. The letter argues that permanent, consistent tax policies are needed to provide long-term market signals and make renewable energy widely available to businesses and consumers, in the same way policies have supported oil and gas.
The document discusses the renewable energy industry in the UK and changing political and economic conditions. It notes that while technology costs are falling and political support is rising, populist anti-renewable political parties present new risks. It also summarizes that the UK aims to meet EU renewable energy targets by 2020 but policy changes risk undermining investment, and the solar industry in particular faces an uncertain future under new UK support mechanisms.
Renewable energy realities in the united states finalDeepa Sanyal
Renewable energy sources generated 11.73% of US energy in early 2011, projected to reach 15% by 2035 if federal subsidies expire as planned. In 2012, focus will shift to state policies like renewable portfolio standards as federal action is unlikely in an election year. Key federal incentives that support renewable projects expire in 2012-2016, so the industry outlook is cautious without extensions. Solar continues advancing towards grid parity while targeting new applications, and geothermal and biomass also see some growth potential depending on policy clarity.
Offshore Wind Energy Installed Capacity to Reach 52,120.9 MW by 2022 collinsR1
The growing focus on renewable energy and the advantages offered by offshore wind energy over its onshore counterpart have led to greater installations of offshore wind energy. Favourable regulatory framework, incentives, and investments by key market players have further supported the market’s growth. The global installed capacity in the offshore wind energy market is anticipated to expand at a CAGR of 25% during the period between 2014 and 2022 to reach 52,120.9 MW by 2022.
How is the offshore wind energy market in Europe shaping up?
In Europe, countries such as the U.K., France, Germany, Netherlands, and Denmark are the pioneers in the offshore wind energy market and hence, Europe is the largest market for offshore wind energy. In 2013, the region reported 1,567 MW of new capacity additions in the offshore wind energy market. Germany holds about 30% of the consented offshore wind farms in Europe and has emerged as one of the leading offshore wind energy markets.
Offshore Wind Energy Market Trends and Forecast 2014 - 2022collinsR1
According to a recent market research report published by Transparency Market Research, the installed capacity in the global offshore wind energy market is expected to increase at a CAGR of 25.0% during the period between 2014 and 2022. The report, titled “Offshore Wind Energy Market - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2014 - 2022,” projects the annual installations in the global offshore wind energy market to reach 7,228 MW by 2022.
Complete Report Offshore Wind Energy Market with TOC : http://www.transparencymarketresearch.com/offshore-wind-energy-market.html
This document analyzes how utilities will evaluate wind generation in a post-PTC market. It identifies key factors utilities consider like existing assets, wind scheduling, capacity margins, and pricing. It also examines exogenous issues around transmission infrastructure and regulations. The document evaluates avoided cost methodologies and provides recommendations for GE to overcome barriers to wind deployment. These include addressing fuel price risk allocation asymmetries, standardizing avoided cost methodologies, considering resource-specific avoided costs, utilizing forward capacity markets, and incorporating externalities into planning.
The document discusses the challenges facing India's power sector over the past decade. Key issues include high financial stress for both public and private power companies, stranded power generation assets, and power shortages in many regions. Attempts to introduce market forces through open access and competitive bidding have had mixed results. Factors contributing to the current problems include the failure of distribution companies to effectively procure power, poor performance of state generation companies, lack of adequate fuel supply, and delays in the procurement process. Moving forward, immediate actions are needed to address financial issues, ensure fuel availability for stranded projects, and improve the procurement process in order to revive investment in the power sector. Long term reforms are also required to establish a sustainable system and avoid repeating
Investment confidence in Australia’s renewable energy sector has significantly improved following the legislation of the revised Large-scale Renewable Energy Target (LRET) in mid-
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1. U.S. Renewable Electricity:
How Does the Production Tax Credit (PTC)
Impact Wind Markets?
Phillip Brown
Specialist in Energy Policy
June 20, 2012
Congressional Research Service
7-5700
www.crs.gov
R42576
CRS Report for Congress
Prepared for Members and Committees of Congress
2. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
Summary
U.S. wind projects that use large turbines—greater than 100 kilowatts (kW)—are eligible to
receive federal tax incentives in the form of production tax credits (PTC) and accelerated
depreciation. Originally established in 1992, the PTC has played a role in the evolution and
growth of the U.S. wind industry. Under existing law, wind projects placed in service on or after
January 1, 2013, will not be eligible to receive the PTC incentive. Industry proponents are
advocating for an extension of PTC availability, citing employment, economic development, and
other considerations as justification for the extension. While a PTC extension may improve the
prospects for U.S. wind development and manufacturing next year and beyond, the wind industry
is influenced by a number of other factors. It is uncertain how the near- or long-term availability
of the PTC incentive—in isolation of changes to other market factors—would either grow or
sustain current wind development and manufacturing levels.
For 2012, the pending expiration of the wind PTC is actually creating a short-term surge in wind
project development and related investment and employment. Wind installations in 2012 are
expected to range somewhere between 10 to 12 gigawatts (GW)—a record year for the industry.
However, market estimates for new installations in 2013 range from 1-2 GW if the PTC expires
and 2-4 GW if the PTC is extended. Limited market activity in 2013 is partially explained by the
uncertain nature of the PTC, which results in reduced manufacturing orders and development
activity as developers and investors wait for official policy direction. Wind installation
projections for 2014 and beyond vary with the assumed availability, and duration, of PTC
incentives. However, all projections reviewed for this report expect annual U.S. wind turbine
demand to be less than the existing U.S. turbine manufacturing capacity—approximately 13 GW
per year.
Other factors that can affect wind development include (1) state renewable portfolio standards
(RPS), (2) U.S. electricity demand growth, and (3) the price of natural gas. State RPS policies
have been the primary demand creator for wind projects, in most cases, by requiring certain
utilities to source a percentage of their retail electricity sales from renewable generators. Market
analysis indicates that incremental RPS-driven demand for all sources of renewable power is
estimated to be 4 GW-5 GW annually until 2025. Additionally, U.S. electricity demand growth is
expected to be modest for the foreseeable future, meaning that there will likely be modest demand
for new electric power capacity. Finally, the price of natural gas can also influence wind markets.
Low natural gas prices can erode the economic competitiveness of wind electricity, while high
natural gas prices can result in opportunities for wind to compete economically without the PTC.
Current estimates from the U.S. Energy Information Administration (EIA) project sustained low,
but increasing, natural gas prices for the next several years.
By the end of 2012, Congress will either allow the PTC incentive to expire or it may choose to
extend or modify the incentive. Should Congress decide to extend the availability of wind PTC
incentives, the duration (e.g., two years, four years, permanent) of such an extension will likely
be part of the policy debate. Generally, the shorter the extension the greater the short-term
economic and employment activity as developers and investors accelerate development plans in
order to qualify for the PTC incentive. However, this development acceleration is likely to reduce
future RPS-driven demand. A permanent PTC is also a policy option that may be considered, and
EIA estimates indicate that such a policy may actually reduce near-term wind capacity additions,
with annual installations peaking at 4 GW in the 2030 timeframe. Higher natural gas prices, more
aggressive RPS policies, and increased U.S. electricity demand could change this outlook.
Congressional Research Service
3. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
Contents
Background...................................................................................................................................... 1
Impact of Current PTC Expiration................................................................................................... 3
Potential Impact of Extending the PTC ........................................................................................... 3
Wind Installations...................................................................................................................... 4
Wind Turbine Manufacturing .................................................................................................... 5
Short-Term versus Long-Term PTC Extension ......................................................................... 5
Other Factors that Affect U.S. Wind Development ......................................................................... 7
State Renewable Portfolio Standards......................................................................................... 7
U.S. Electricity Demand Growth............................................................................................... 9
Natural Gas Price..................................................................................................................... 10
Example 1: Markets Coordinated by a Regional Transmission Organization................... 11
Example 2: California RPS Cost Containment Approach................................................. 13
Policy Discussion........................................................................................................................... 13
Allow the PTC to Expire ......................................................................................................... 14
Extend the PTC Incentive........................................................................................................ 14
Phase-Out of the PTC.............................................................................................................. 15
Figures
Figure 1. Annual U.S. Wind Power Capacity Additions.................................................................. 2
Figure 2. Estimated U.S. Wind Installations, With and Without a PTC Extension ......................... 4
Figure 3. EIA Estimates for Annual Wind Capacity Installations: Long-Term PTC ....................... 6
Figure 4. Projected U.S. Electricity Demand Growth ..................................................................... 9
Figure 5. U.S. and Chinese Projected Electricity Demand Growth............................................... 10
Figure 6. Simplified Electricity Dispatch Curve for Wholesale Power ......................................... 12
Tables
Table 1. Selected Bills Introduced to Extend Wind PTC Incentives ............................................. 14
Contacts
Author Contact Information........................................................................................................... 15
Congressional Research Service
4. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
Background
Federal incentives for operational renewable electricity projects have generally been in the form
of tax benefits, including production tax credits (PTC), investment tax credits (ITC), and
accelerated depreciation.1 Renewable energy production tax credits were first introduced in the
Energy Policy Act of 1992.2 Section 45 of the Internal Revenue Code (IRC) outlines production
tax credit incentives for wind, biomass, geothermal, landfill gas, trash, qualified hydropower, and
marine and hydrokinetic projects that generate electricity. Under current law, the production tax
credit for new wind projects will no longer be available as of January 1, 2013.3 For all other
eligible renewable energy projects, the PTC is available to projects placed in service before
January 1, 2014.4
PTC policies provide incentives for electricity projects by providing a tax credit for each
kilowatt-hour of electricity produced by a qualified project during the first 10 years of operation.
Currently, the tax credit for wind projects is 2.2 cents ($0.022) per kilowatt-hour.5 The PTC
incentive is annually adjusted for inflation.
To date, the wind industry has been the largest beneficiary of federal production tax credits. The
industry has experienced substantial growth over the last several years, with annual capacity
installations generally increasing since 2005 (see Figure 1). As of the end of March 2012,
cumulative U.S. wind power capacity was 48,611 megawatts, equal to approximately 4% of total
U.S. generation capacity.6 In 2011 wind was the largest source of non-hydro renewable electricity
generation, providing approximately 120 million megawatt-hours, roughly 3% of total U.S.
generation.7
1
For additional background on U.S. energy tax policy and the production tax credit for renewable energy projects, see
CRS Report R41227, Energy Tax Policy: Historical Perspectives on and Current Status of Energy Tax Expenditures,
by Molly F. Sherlock.
2
Ibid.
3
Production tax credits for wind power projects are for those that use wind turbines larger than 100 kilowatts (the
majority of current installed capacity). For wind projects that use 100 kilowatt and smaller wind turbines, a 30%
investment tax credit is available until January 1, 2017.
4
For more information see IRC §45.
5
“Credit for Renewable Electricity Production, Refined Coal Production, and Indian Coal Production, and Publication
of Inflation Adjustment Factors and Reference Prices for Calendar Year 2012,” Department of the Treasury: Internal
Revenue Service, Federal Register Vol. 77, No. 70, p. 21835, April 11, 2012.
6
AWEA U.S. Wind Industry First Quarter 2012 Market Report, American Wind Energy Association, 2012, available at
http://www.awea.org/learnabout/publications/reports/upload/AWEA_First_Quarter_2012_Market_Report_Public.pdf.
7
Electric Power Monthly, U.S. Energy Information Administration, March 2012.
Congressional Research Service 1
5. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
Figure 1. Annual U.S. Wind Power Capacity Additions
(2005-2012)
Source: American Wind Energy Association (AWEA) annual and quarterly reports. 2012 projections from
Bloomberg New Energy Finance and CRS conversations with various wind market analysts.
In response to U.S. wind market growth, a number of manufacturing and assembly facilities were
established to supply wind turbine components and systems. In 2012, the U.S. wind
manufacturing sector is estimated to have the capacity to produce approximately 13 gigawatts
(GW) of wind turbines annually.8 Industry estimates indicate that approximately 470 facilities in
the United States provide various products (e.g., towers, turbines, gear boxes) for the wind
turbine manufacturing supply chain.9 In 2011, the wind industry reported that these facilities
supported approximately 30,000 jobs.10
There are many arguments both for and against tax incentives for renewable electricity
generation. Proponents of extending the wind PTC point to the potential loss of manufacturing
and construction jobs that will result if the tax incentive is allowed to expire, the environmental
benefits of U.S. wind development, and the potential to re-establish the United States as a global
leader in an emerging industry. Opponents of a wind PTC extension argue that all electricity
generators should be subject to market-based competition, wind electricity generation has been
incentivized for a long enough period of time, and wind projects should compete on their own
economic and environmental merits without the support of federal financial incentives.
This report examines how the production tax credit and its impending expiration impact the wind
industry, and how other factors influence market demand for wind power projects.
8
Zindler, Ethan. “Clean Energy Market Trends: US House Renewable Energy and Energy Efficiency Caucus,”
Bloomberg New Energy Finance, May 9, 2012.
9
AWEA U.S. Wind Industry Annual Market Report: Year Ending 2011, American Wind Energy Association, 2012.
Also, for more information about U.S. wind manufacturing, see CRS Report R42023, U.S. Wind Turbine
Manufacturing: Federal Support for an Emerging Industry, by Michaela D. Platzer.
10
Ibid.
Congressional Research Service 2
6. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
Impact of Current PTC Expiration
U.S. wind installations are expected to reach record levels in 2012, with industry analysts
estimating between 10 GW and 12 GW of total installations by the end of the year.11 As a result,
related economic development, employment, and manufacturing activities needed to support 2012
wind installations are likely to be at record levels. Wind developers, utility companies, and
investors are accelerating their planned wind projects in order to qualify for tax credit incentives
that might not be available in 2013 and beyond.
In essence, the pending PTC expiration at the end of 2012 has actually created a short-term surge
in wind-related manufacturing and employment. Due to lead times—generally 12 to 18 months—
required to fully develop wind projects, most manufacturing activities supporting 2012 wind
capacity additions likely occurred either in 2011 or during the first quarter of 2012. Wind-related
employment and economic development activity in the second half of 2012 will be primarily
focused on construction, installation, and commissioning activities for projects in development.
Based on current market conditions and other factors, it is unlikely that 2012 wind development
levels can be sustained in either the near or long term, regardless of PTC availability.
Accelerated wind development in anticipation of the PTC expiring can create a severe market
downturn in the year following PTC expiration. The wind PTC has expired three times since 2000
(in 2000, 2002, and 2004), and the wind industry experienced precipitous drops in annual wind
capacity installations in each of those years.12 One market estimate projects that 2013 wind
capacity additions may drop to as low as 1 GW in 2013, if the PTC is not extended.13
Potential Impact of Extending the PTC
Production tax credits for wind-generated electricity provide a financial incentive for project
developers and investors to install wind projects in the United States. However, the PTC incentive
is only one of several factors that influence wind development, and a PTC extension, in isolation
of other market factors, may not result in ever-larger levels of wind deployment. Other important
factors for project development include state renewable portfolio standards, electricity demand
growth, and natural gas prices. Each of these factors is discussed in more detail below. The
following sections provide some background on how a PTC extension might impact U.S. wind
project installations and manufacturing. A brief discussion of the potential impact of a short-term
versus long-term PTC extension is also provided.
11
Bloomberg New Energy Finance estimates 2012 wind installations to be approximately 10.5 gigawatts; see Zindler,
Ethan, “Clean Energy Market Trends: US House Renewable Energy and Energy Efficiency Caucus,” Bloomberg New
Energy Finance, May 9, 2012. CRS conversations with other market analysts indicate that 10 GW to 12 GW in 2012 is
a general range for wind capacity installations.
12
Federal Production Tax Credit for Wind Energy: The American Wind Industry Urges Congress to Take Immediate
Action to Pass an Extension of the PTC, American Wind Energy Association, available at http://www.awea.org/issues/
federal_policy/upload/PTC-Fact-Sheet.pdf.
13
Zindler, op. cit.
Congressional Research Service 3
7. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
Wind Installations
Various organizations have estimated the amount of wind project development under scenarios in
which the PTC is either extended or is not extended. CRS obtained forecast information from the
U.S. Energy Information Administration (EIA) and from Bloomberg New Energy Finance
(BNEF) that estimates the amount of wind capacity (megawatts) expected to be installed under
different PTC availability scenarios. Figure 2 compares estimated wind installations with existing
U.S. wind turbine manufacturing capacity.
Figure 2. Estimated U.S. Wind Installations, With and Without a PTC Extension
(2006-2015)
Source: Zindler, Ethan, “Clean Energy Market Trends: U.S. House Renewable Energy and Energy Efficiency
Caucus,” Bloomberg New Energy Finance, May 9, 2012; and, U.S. Energy Information Administration, Annual Energy
Outlook 2011, AEO Table Browser, May 24, 2012, available at http://www.eia.gov/oiaf/aeo/tablebrowser/
#release=AEO2011&subject=10-AEO2011&table=16-AEO2011®ion=0-0&cases=nosunset-
d030711a,extended-d031011a,ref2011-d020911a.
Notes: The BNEF “3yr PTC extension” case shows a large capacity addition increase from 2014 to 2015. This is
likely explained by the expiring nature of the three-year extension and the expectation that developers would
accelerate their projects in order to qualify for the PTC incentive before the deadline. Unlike the BNEF three-
year extension scenario, EIA estimates wind capacity additions for two scenarios that assume indefinite
availability of the PTC. As indicated in the figure, the long-term PTC extension actually results in less near-term
development activity since there is no expiration date motivating developers to accelerate project development
timelines. For background information about EIA’s model and analysis results, see the “notes” section in Figure
3. EIA’s “Extended Policies” and “No sunset” scenarios both assume an indefinite extension of PTC incentives,
but annual capacity estimates are different for each scenario. In addition to the indefinite availability of PTC
incentives, the “Extended Policies” scenario also includes assumptions for energy efficiency policies that are
extended over longer periods of time. These energy efficiency measures effectively reduce U.S. electricity
demand, and therefore reduce the amount of additional wind capacity needed to comply with RPS policies.
As indicated in Figure 2, both BNEF and EIA forecast levels of wind development in 2013 and
2014 that are much less than development activity expected in 2012. As a result, levels of
Congressional Research Service 4
8. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
investment, manufacturing, and employment activity will be commensurately lower in the near
term, even with a PTC extension. However, a short-term PTC extension may result in higher
near-term levels of development activity when compared to scenarios without a PTC extension.
Wind Turbine Manufacturing
Neither BNEF nor EIA estimate a scenario where wind installations meet or exceed existing U.S.
wind turbine manufacturing capacity (see Figure 2). As a result, a PTC extension is unlikely to
result in stimulating additional wind manufacturing facilities in the United States. Estimated wind
installations in 2013 and 2014 are expected to drop to levels much lower than existing U.S.
manufacturing capacity, including PTC extension scenarios. Whether the PTC expires or is
extended, U.S. wind manufacturing utilization levels will likely be less than levels needed to
support the wind market in 2012. Therefore, some U.S. wind manufacturing facilities could
reduce operations or even completely shut down in 2013 and beyond.
Much like the U.S. wind market, there is excess capacity in the global wind turbine
manufacturing sector.14 The competitive global market for wind generating equipment is one
factor that may limit U.S. wind turbine manufacturing export opportunities.15 Other factors
affecting U.S. wind exports may include logistic and transportation costs associated with
exporting large wind turbine equipment and certain local-content policies within global markets
that may require co-locating manufacturing capability within a geographical market area.
However, excess wind turbine manufacturing capacity will likely result in wind turbine price
decreases as manufacturers improve their cost and technology performance. Wind turbine price
declines would contribute to new wind projects becoming more economically competitive with
other sources of electricity generation on an unsubsidized basis.
Short-Term versus Long-Term PTC Extension
Some advocates for extending the availability of the PTC for wind projects argue that a long-term
extension is needed to provide stable incentives that will result in certainty within the wind
industry and may stimulate growth. The American Wind Energy Association (AWEA) states the
following:
The wind industry seeks long-term tax policies, lasting more than just a few years, to provide
consistency and market certainty.16
AWEA and other proponents of extending the availability of the PTC incentive argue that the
expiring nature of production tax credits has created a volatile U.S. wind market with new
installations ramping up just before the credits expire, and the following year having very little
new wind development.17 It is possible that such uncertainty could reduce investment, research,
14
“Q1 2012 Clean Energy Policy & Market Briefing: Policy pullbacks, weak economies, market oversupply slow Q1
investment,” Bloomberg New Energy Finance, April 18, 2012.
15
According to the Global Trade Information Service, U.S. wind power generating set (HS 8502.31) exports were
approximately $255 million in 2011.
16
American Wind Energy Association website, June 4, 2012, http://www.awea.org/issues/federal_policy/index.cfm.
17
Federal Production Tax Credit for Wind Energy: The American Wind Industry Urges Congress to Take Immediate
Action to Pass an Extension of the PTC, American Wind Energy Association, available at http://www.awea.org/issues/
federal_policy/upload/PTC-Fact-Sheet.pdf.
Congressional Research Service 5
9. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
and employment in the wind industry. Going forward, an element of the PTC debate may include
the duration of PTC availability. If the PTC is extended, should it be a short-term, long-term, or
indefinite extension?
Short-term PTC extensions generally result in short-term manufacturing, development, and
employment activity as project developers and investors seek to capture the value of tax credit
incentives during their availability window. However, since much of the demand for wind-
generated electricity is a result of state-level renewable portfolio standards (discussed in more
detail below), a short-term PTC extension would likely result in accelerating wind deployments
needed to comply with state RPS requirements. This acceleration scenario is illustrated by the
BNEF three-year PTC extension forecast (dark green line) in Figure 2, where annual installations
reach 4 GW in 2013, 5 GW in 2014, and then ramp up to approximately 10 GW in 2015, when
the credit extension would end. As a result, RPS-related demand in later years would likely
decline and any future PTC extensions may or may not provide enough incentive to stimulate
additional development activity.
Alternatively, a stable and long-term PTC incentive would provide manufacturers and developers
with known incentive levels over an established period of time. However, a long-term or
permanent PTC may not stimulate market activity comparable to levels observed between 2010
and 2012. EIA forecasts indicate that an indefinite PTC extension could result in more total wind
capacity installations over the projection period (see Figure 3) when compared to a reference
case scenario. However, annual capacity installations in the long-term extension scenario are
relatively modest (in some years zero) and peak at around 4 GW. These annual installation levels
are much lower than the existing 13 GW of U.S. wind turbine assembly capacity.
Figure 3. EIA Estimates for Annual Wind Capacity Installations: Long-Term PTC
(2011-2035)
Source: U.S. Energy Information Administration, Annual Energy Outlook 2011, AEO Table Browser, May 24,
2012, available at http://www.eia.gov/oiaf/aeo/tablebrowser/#release=AEO2011&subject=10-AEO2011&table=
16-AEO2011®ion=0-0&cases=nosunset-d030711a,extended-d031011a,ref2011-d020911a.
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10. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
Notes: EIA uses its National Energy Modeling System (NEMS) to make annual projections for the U.S. energy
sector. Annually installed wind capacity, as indicated in this figure, is one of several outputs from the NEMS
model. NEMS includes several modules. One module is the Electricity Market module, which is used to calculate
the projections provided in this figure. The Electricity Market module evaluates the U.S. electricity market based
on different regions and considers future wind capacity additions based on regional economic and policy
conditions. Generally, wind capacity is added based on federal policy, market economics, and as needed in order
to comply with state RPS requirements. With respect to state RPS requirements, NEMS considers the amount of
renewable electricity capacity in the various regions and the amount of renewable electricity required to comply
with state RPS policies. NEMS does not, however, consider every policy design element included in each state
RPS, such as credit sale limitations, credit banking, or credit borrowing.
A Note About Market Forecasts and Analytical Models
Market analysts have a difficult job in that they are required to predict the future in order to forecast expected
market activity. Typically, market forecasts are estimated using a predictive numerical model that includes a number
of assumptions about various factors that can significantly impact the forecasted results. Generally speaking, near-term
forecasts have a higher degree of accuracy than long-term forecasts, simply because assumptions and variables that
influence the model are more difficult to predict over longer time frames. Furthermore, forecasts will change over
time as market conditions and other variables change.
Forecasts and predictions referenced in this report are no exception. Two different forecasting methodologies, with
different assumptions, were used to derive the forecasts in this report, and results from each approach are obviously
different. As a result, each estimate varies and neither forecast can be considered correct or incorrect. Additionally,
estimates provided in this report are static as of the date they were released. In practice, market forecasts are
typically updated periodically to reflect market, financial, and policy changes.
Market forecasts are valuable to policy makers, project developers, manufacturers, and other stakeholders since they
allow for an assessment of expected market activity under certain assumptions. Furthermore, market forecasts can
provide some perspective on the potential impact of market and policy changes. Nevertheless, it is important to
recognize that models used to forecast the future have limits and reality will most likely differ from the projections
provided in this report. Finally, the level of accuracy of market forecasts can only be determined by observing actual
results in the future.
Other Factors that Affect U.S. Wind Development
As briefly discussed above, availability of the federal production tax credit is one of several
factors that impact the amount of wind development and deployment in the United States.
Generally, state-level renewable portfolio standards (RPS) create a source of demand for wind
projects. Overall U.S. electricity demand growth is also an important factor as it determines the
total addressable market that wind projects can target. Low natural gas prices can create economic
competitiveness pressure for wind projects but high natural gas prices can result in additional
opportunities for the wind sector. While not an all-inclusive list of factors that affect wind
development, the factors addressed below do represent some of the critical non-PTC factors that
influence the U.S. wind industry. The following sections provide additional details about each
factor.
State Renewable Portfolio Standards
Generally, but not in all instances, a renewable portfolio standard is a policy that requires a
certain percentage of electricity sold or generated within a defined geographical area be derived
from qualified renewable energy sources.18 As of May 2012, 29 states plus the District of
18
The state of Texas is an exception to this generality. According to DSIRE (Database of State Incentives for
Renewables & Efficiency, http://www.dsireusa.org), Texas has a renewable generation requirement that requires
(continued...)
Congressional Research Service 7
11. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
Columbia and Puerto Rico had binding RPS policies.19 While the general concept of an RPS is
the same for all states, each state typically has a unique design and implementation approach for
its respective RPS policy. For example, the state of California requires that by 2020 its utility
companies will have 33% of their retail electricity sales generated from renewable energy
sources.20
State RPS policies are the primary renewable electricity demand driver, although demand for
renewable power can also be encouraged by voluntary green power programs and fundamental
economics.21 Analysis by Lawrence Berkeley National Laboratory (LBNL) indicates that
approximately 27 GW of non-hydro renewable electricity capacity was added in states with RPS
policies in the years 1998-2010.22 On a capacity basis, 92% of these renewable electricity
additions were wind power projects.23 From a generation perspective, the combination of
mandated demand at the state level and federal financial incentives has created an environment
that supports development of renewable electricity projects, most notably wind projects.
One typical compliance approach for RPS policies is submitting renewable energy certificates
(RECs) to the appropriate state agency that manages RPS compliance.24 RECs, each of which
receives a unique tracking identification number, represent the renewable attributes of electricity
generated from a qualified renewable power facility. One REC typically represents one
megawatt-hour of renewable electricity. RECs can be obtained on either a bundled basis, where a
utility company contracts to purchase both the electricity and associated RECs from a renewable
generator, or an unbundled basis, in which case a utility company may purchase qualified RECs
from other entities. RECs can potentially provide an additional revenue source for wind projects,
although the value of RECs can vary depending on the supply/demand balance within certain
markets.
Analysis of state RPS compliance indicates that existing renewable electricity capacity may be
adequate to allow for RPS compliance over the next several years. Furthermore, future RPS-
driven demand may not be large enough to stimulate substantial growth in the wind electricity
sector. LBNL estimates that approximately 4 GW-5 GW of annual renewable electricity capacity
additions between 2011 and 2025 would be required in order to meet state RPS requirements.25
(...continued)
5,880MW of installed renewable capacity by 2015.
19
Database of State Incentives for Renewables & Efficiency, http://www.dsireusa.org. A summary map of state RPS
policies is available at http://www.dsireusa.org/documents/summarymaps/RPS_map.pdf.
20
Database of State Incentives for Renewables & Efficiency, available at http://www.dsireusa.org/incentives/
incentive.cfm?Incentive_Code=CA25R&re=1&ee=1.
21
Voluntary green power markets are those in which consumers, businesses, and other entities purchase a certain
amount of renewable energy on a voluntary basis. For more information on voluntary green power, see Jenny Heeter
and Lori Bird, “Status and Trends in U.S. Compliance and Voluntary Renewable Energy Certificate Markets (2010
Data),” National Renewable Energy Laboratory, October 2011.
22
Ryan Wiser and Galen Barbose, “The State of the States: Update on the Implementation of U.S. Renewable Portfolio
Standards,” Presentation at the 2011 National Summit on RPS, Lawrence Berkeley National Laboratory, October 26,
2011.
23
Ibid.
24
For additional background on RECs, see Holt, E., Sumner, J., and Bird, L., Role of Renewable Energy Certificates in
Developing New Renewable Energy Projects, National Renewable Energy Laboratory, 2011, available at
http://www.nrel.gov/docs/fy11osti/51904.pdf.
25
Ryan Wiser and Galen Barbose, “The State of the States: Update on the Implementation of U.S. Renewable Portfolio
Standards,” Presentation at the 2011 National Summit on RPS, Lawrence Berkeley National Laboratory, October 26,
(continued...)
Congressional Research Service 8
12. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
This compares to 6 GW-11 GW of renewable capacity installed between 2008 and 2010.26 RPS-
driven renewable electricity demand, on its own, does not appear large enough to support annual
wind industry growth going forward, and RPS policies may not provide enough demand to
sustain annual wind capacity installations compared to levels installed in the years 2009 to 2012,
or to match current U.S. manufacturing capacity.
U.S. Electricity Demand Growth
Electricity demand growth is an important factor when considering opportunities for renewable
electricity for two primary reasons. First, generally, the greater the annual demand growth the
more new electricity capacity needed to satisfy that demand. Larger annual requirements for new
electricity capacity create more opportunities for renewable electricity projects to compete.
Second, large annual demand growth can result in a larger base of electricity to which RPS
policies are applied. The larger the electricity base, the greater the amount of renewable
electricity required to comply with state percentage-based RPS policies. However, EIA projects
modest growth levels for U.S. electricity demand over the next several years (see Figure 4).
Figure 4. Projected U.S. Electricity Demand Growth
(2011-2015)
Source: EIA Annual Energy Outlook 2011, U.S. Energy Information Administration.
Long-term U.S. electricity demand is expected to continue along a modest annual growth path out
to 2035. However, electric power demand in developing economies, such as China, is expected to
experience significant annual growth out to 2035 (see Figure 5).
(...continued)
2011.
26
Ibid.
Congressional Research Service 9
13. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
Figure 5. U.S. and Chinese Projected Electricity Demand Growth
(Annual Demand in 2009 and 2035)
Source: World Energy Outlook 2011, International Energy Agency, 2011.
As indicated in Figure 5, expected electric power demand growth profiles for the United States
and China are very different, with China’s growth level forecasted to be much larger than that of
the United States. Therefore, opportunities for new electric generation capacity in China will be
commensurately larger. As result, the Chinese electricity market may present more opportunities
for renewable electricity projects, including wind power, due to the large amount of additional
installations needed to meet projected electricity demand.
Natural Gas Price
The price of natural gas also has an impact on the U.S. wind market. Generally, lower natural gas
prices can reduce the economic competitiveness of wind power, while higher natural gas prices
can create opportunities for wind to compete on economics alone, in some cases without
subsidies. Since wind power economics vary depending on project location, there is no single
natural gas price level at which all wind projects can compete either on an unsubsidized basis or
with the availability of PTC incentives. Furthermore, natural gas prices can affect wind power in
different ways depending on the state or region in which a wind project operates.
U.S. electricity markets are complex, and a comprehensive analysis of electricity markets is
beyond the scope of this report.27 Generally, however, there are two distinct types of markets in
the United States: (1) competitive markets: power generators are subject to price competition
when selling power into wholesale markets, and (2) cost-of-service markets: power generators
earn a regulated rate of return established by a public utilities commission.28 According to one
27
For additional background on the U.S. power sector, see Electricity Primer–The Basics of Power and Competitive
Markets, Electricity Power Supply Association, available at http://www.epsa.org/industry/primer/.
28
Ibid.
Congressional Research Service 10
14. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
estimate, approximately two-thirds of electricity consumed in the United States is within
competitive markets.29 Furthermore, there are several regional power markets in the United
States, each with a unique market structure, fuel mix, and set of rules that govern market
operations. Depending on the respective market characteristics, natural gas prices can impact
wind projects in different ways. The following sections provide two simplified examples of how
natural gas prices might impact the economics, and development, of U.S. wind power projects.
Example 1: Markets Coordinated by a Regional Transmission Organization
Competitive electricity markets are typically managed by a Regional Transmission Organization
(RTO) or an Independent System Operator (ISO), a third-party operator of the electricity
transmission system for a defined geographical area. In essence, the RTO provides a market
making function and is a critical interface between electricity purchasers and suppliers. RTO-
coordinated markets can generally be described as markets where wholesale electricity rates are
frequently established (typically on an hourly basis) through a bidding process. Power generators
provide bids, usually based on the variable cost for each respective generator, to supply a certain
amount of electricity. The RTO will organize the bids from the lowest to the highest. The bid offer
price that matches the level of electricity supply necessary to meet power demand sets what is
known as the “clearing price.” Figure 6 provides a simplified example of how the clearing price
might be established for wholesale electric power within an RTO-coordinated market. All
generators that supply electricity at or below the clearing price are paid for their electricity supply
at the clearing price level. However, many power generators may establish power purchase
agreements (PPAs) directly with utility companies to provide long-term revenue certainty. In
these instances financial transactions between generators and power purchasers will often occur
exclusive of the RTO clearing price mechanism in order to satisfy PPA terms and conditions.
29
ISO/RTO Council, http://www.isorto.org/site/c.jhKQIZPBImE/b.2603917/k.B00F/About.htm, June 20, 2012.
Congressional Research Service 11
15. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
Figure 6. Simplified Electricity Dispatch Curve for Wholesale Power
(Hypothetical RTO Market Example)
Source: CRS adaptation of Locational Marginal Pricing (LMP) Overview, page 22, PJM, October 18, 2011, available
at https://www.pjm.com/training/~/media/training/core-curriculum/ip-lse-201/lmp-overview.ashx.
Notes: This figure illustrates how the wholesale electricity clearing price might change as a function of power
demand. The red line represents the bid offer prices for electricity that are organized from low to high.
Depending on the level of demand (three different hypothetical levels illustrated in this figure), the clearing price
is adjusted in order to satisfy required demand for electricity delivery during a certain time period.
MW = megawatts
MWh = megawatt-hour
In certain electricity markets, during different times of year, and during certain times throughout a
day, especially during daytime hours when electricity demand peaks, natural gas power
generation sets the clearing price. Since natural gas fuel costs are the largest contributor to natural
gas power generation costs, there will be some degree of correlation between the price of natural
gas and the wholesale electricity clearing price within certain markets. Generally, as natural gas
prices rise, so does the clearing price during certain times throughout the day. However, total
electricity demand within a market can also impact wholesale electricity prices. For wind projects
that participate in this type of market without a PPA, also known as “merchant wind,” the clearing
price will usually determine the revenue received for electricity sold into the market. Although, in
certain instances, wind projects can supplement their electric power revenue by selling renewable
energy certificates (RECs) to entities required to comply with state RPS policies.30 Nevertheless,
higher natural gas prices and the resulting higher electricity clearing prices can increase revenues
for wind projects thereby making them attractive investment and development opportunities.
Conversely, lower natural gas prices and lower clearing prices can decrease wind project revenues
to a point where projects are not economically viable.
30
Renewable Energy Credits (RECs) are issued to renewable electricity generators as a means of documenting, and
accounting for, the renewable energy attributes of power generation. In some markets, RECs are “bundled” with
electric power, in which case the purchaser of the power also receives the RECs. In other markets RECS are
“unbundled,” in which case the electric power and the RECs may be sold to different buyers. For additional
background on RECs, see Holt, E., Sumner, J., and Bird, L., Role of Renewable Energy Certificates in Developing New
Renewable Energy Projects, National Renewable Energy Laboratory, 2011, available at http://www.nrel.gov/docs/
fy11osti/51904.pdf.
Congressional Research Service 12
16. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
Wind projects in RTO-coordinated markets can mitigate wholesale market price risk by entering
into long term PPAs with utility companies. In this case, utility companies absorb the risks
associated with low wholesale clearing prices. Utilities may be motivated to enter into PPAs with
wind projects as a means of complying with state RPS policies or as a way to hedge against rising
natural gas and wholesale electricity prices. However, many state RPS policies include an
alternative compliance payment (ACP) design element whereby utilities can opt to make
payments to an ACP fund instead of generating or purchasing a required amount of renewable
electricity. Low natural gas prices can lower electricity prices and result in making ACPs more
economical than either building or paying for renewable generation. Thus, the short- and long-
term price of natural gas, along with any ACP policy, can impact a utility company’s decision to
enter into PPAs with renewable electricity generators.
Example 2: California RPS Cost Containment Approach
The state of California currently has one of the most aggressive RPS policies.31 However, as part
of the policy design, the California RPS includes a cost containment design element, which is
directly linked to the price of natural gas. California has used a Market Price Referent (MPR) as a
benchmark for determining the price premium required to support certain sources of renewable
electricity. If contract prices for renewable electricity exceed MPR levels, then formal approval
by the California Public Utilities Commission (CPUC) of the contract must be obtained and
above market funds (AMFs) must be available to compensate for the additional cost associated
with purchasing the renewable power.32 AMFs establish cost limits for California electric utility
companies required to comply with the state’s RPS policy.33 Benchmark MPR prices are set based
on the levelized price of electricity from a 500 MW natural gas-fired combined cycle gas turbine
(CCGT).34 Consequently, natural gas prices can significantly influence MPR benchmark price
levels. This approach is designed to contain costs associated with RPS implementation since “the
MPR sets a limit on the procurement obligations of retail sellers under the RPS program.”35
Policy Discussion
The 112th Congress may decide if the PTC incentive for wind electricity will be extended,
modified, or terminated. During the congressional debate about the future of the wind PTC
incentive, Congress may consider various policy options, including those discussed below.
31
For additional information about California’s RPS policy, see http://www.dsireusa.org/incentives/incentive.cfm?
Incentive_Code=CA25R&re=1&ee=1.
32
Additional information about California’s Market Price Referent is available at http://www.cpuc.ca.gov/PUC/energy/
Renewables/mpr.
33
For more information about California’s approach to RPS Cost Containment, see http://www.cpuc.ca.gov/PUC/
energy/Renewables/SB1036implementation.htm, June 11, 2012.
34
The term “levelized price” basically reflects the average price at which the baseline CCGT power generation plant
would need to sell electricity in order to pay for capital, operation, maintenance, fuel, and finance costs over a defined
period of time. A critical assumption used for calculating levelized price is the power plant capacity factor, the amount
of operating time during each calendar year.
35
Resolution E-4442, Public Utilities Commission of the State of California, December 1, 2011, available at
http://docs.cpuc.ca.gov/WORD_PDF/FINAL_RESOLUTION/154753.PDF.
Congressional Research Service 13
17. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
Allow the PTC to Expire
Absent congressional action, the PTC incentive for wind electricity projects will no longer be
available for new installations placed in service after January 1, 2013. Some market projections
suggest that annual wind capacity additions will decline precipitously if the PTC expires (see
Figure 2). As a result, wind-related manufacturing and project development employment would
decline as well. Allowing the PTC to expire may motivate wind equipment manufacturers and
developers to take certain actions (e.g., maximize turbine performance, minimize manufacturing
costs) necessary to make wind electricity more broadly competitive on an unsubsidized basis.
These actions could potentially result in a stronger and more robust, although possibly smaller,
wind industry that can compete directly with all sources of power generation. However if state
RPS policies remain as-is and low natural gas prices persist, a prolonged industry contraction
could limit the ability of the wind industry to respond once, and if, market conditions change.
Extend the PTC Incentive
Congress might also consider extending the PTC incentive. Some market estimates indicate that a
PTC extension would result in increasing U.S. wind capacity installations, when compared with
allowing the PTC to expire—but at levels less than those observed since 2009 and less than
current U.S. wind turbine manufacturing capacity (see Figure 2). Determining the duration of a
possible PTC extension is also an important policy consideration. Generally, the shorter the
extension the more near-term wind market activity that may be stimulated since project
developers are motivated to install new capacity in order to qualify for PTC incentives. However,
depending on the timing of an extension, a one-year extension may have limited impact due to
12-18 month wind project development lead times. Also, as discussed above, the near-term
market stimulation that might result from a PTC extension may accelerate wind development at
the expense of future-year RPS-driven demand. A permanent PTC may not stimulate near-term
wind development activity since there would likely be less motivation to accelerate projects in
order qualify for federal tax incentives (see Figure 3). However, in a market where natural gas
prices are rising, a permanent PTC could potentially stimulate wind electricity demand that might
not otherwise occur.
Some bills have been introduced in the 112th Congress that would extend the availability of the
PTC incentive for wind electricity projects. Table 1 includes four bills that have been introduced
and compares the duration of the PTC extension under each proposal.
Table 1. Selected Bills Introduced to Extend Wind PTC Incentives
(112th Congress)
Bill Number Bill Title PTC Extension Status
H.R. 3307 American Renewable 4 years November 2, 2011;
Energy Production Tax referred to House
Credit Extension Act of Committee on Ways and
2011 Means
H.R. 5187 IMPACT Act of 2012 8 years April 27, 2012; referred to
House Energy and
Commerce Subcommittee
on Energy and Power
Congressional Research Service 14
18. U.S. Renewable Electricity: How Does the PTC Impact Wind Markets?
Bill Number Bill Title PTC Extension Status
S.Amdt. 1812 Amendment to S. 1813 1 year March 13, 2012; not agreed
(MAP-21) to by a vote of 49-49
S. 2201 American Energy and Job 2 years March 15, 2012; referred
Promotion Act to Senate Finance
Committee
S. 2204 Repeal Big Oil Tax 1 year March 29, 2012; Senate
Subsidies Act voted 51-47 to not invoke
cloture
Source: Legislative Information System.
Phase-Out of the PTC
Another policy option that has been discussed during the 112th Congress is the possibility of an
extension that phases out the PTC incentive over time.36 The basic concept of a PTC phase-out is
to gradually reduce the value of the incentive over time in order to provide the industry a degree
of certainty and a motivation to improve cost and performance efficiencies in order to become
price competitive without the PTC.37 The design of a PTC phase-out policy could potentially be
difficult because, in order to stimulate U.S. wind development, the rate at which the PTC is
reduced may need to be offset by, or aligned to changes in, other market factors (e.g., higher
natural gas prices, more stringent state RPS policies, increased U.S. electricity demand). These
other market factors will likely be beyond the scope of control of the PTC phase-out policy. An
alternative approach may be a dynamic PTC phase-out design that requires a minimum PTC
incentive reduction annually but could also be adjusted based on other market conditions (e.g.,
natural gas prices, system costs, technology improvements). Implementation of a dynamic PTC
phase-out could potentially be complicated as well and the policy would need to be designed in
such a way to motivate the industry to continue cost reduction and technology improvement
initiatives.
Author Contact Information
Phillip Brown
Specialist in Energy Policy
pbrown@crs.loc.gov, 7-7386
36
Nick Juliano, “Interest grows in Senate for phaseout of production tax credit,” E&E Daily, March 28, 2012.
37
Under current law (IRC Section 45), the PTC includes a phase-out provision that is based on a reference electricity
price. Details of the phase-out existing phase-out provision are included in IRC Section 45, available at
http://www.novoco.com/energy/resource_files/irs_guidance/irc/section_45.pdf.
Congressional Research Service 15