EIA: Government action on tax credits to sway renewable energy markets in future decades
With federal tax credits for renewable technologies slated to sunset in the coming years, the U.S. Energy Information Administration (EIA) reported on Tuesday that government action or inaction on the matter would influence wind and utility-scale solar production in coming years.
Congress last extended phase-out schedules for the Production Tax Credit (PTC) and the Investment Tax Credit (ITC) in 2015. PTC value in dollars per megawatt hour for wind and other PTC-eligible projects began declining by 20 percent annually in 2017 and will end in 2019. The 30 percent ITC for solar power, meanwhile, will start dropping in 2020 and will expire in 2022.
EIA used reference cases to determine the impact that extending or eliminating PTC and ITC would have on renewable energy markets. The PTC/ITC extension case concluded that extending full credits through 2050 would result in a near-term decline in new wind capacity — but 40 percent more wind generation by 2050 than if the tax credits were allowed to lapse on schedule.
The PTC/ITC early sunset case shows wind electricity generation would continue to increase through 2050, topping out at 382 billion kilowatt hours, an increase of 55 percent from 2017. However, wind generation would be 57 billion KWh less than if the tax credits were extended.
The EIA also reviewed the impact of the approved 30 percent tariff on crystalline silicon photovoltaic (PV) cells and module imports to the United States. The tariff, slated to begin in 2018 and to decline by five percentage points annually until expiration, was found to have little impact on end-use solar installations. The reason, EIA concluded, is that module costs account for a smaller percentage of total expenses for end-use solar PV systems. Residential and nonresidential costs would be 4 percent and 6 percent higher, respectively, because of the tariffs in 2018.
