In a strategic shift, the American wind industry has begun pressing lawmakers to extend solar’s ITC to onshore wind projects.
The U.S. wind industry has begun a push in Washington, D.C. to level the tax-incentive playing field with solar energy, pivoting from its longstanding but now fading wind Production Tax Credit (PTC).
The American Wind Energy Association, the industry’s main trade group, wants to see onshore wind projects be made eligible for the Investment Tax Credit (ITC) currently available to solar plants, said AWEA chief executive Tom Kiernan, speaking Thursday in New York.
“What we’re up on Capitol Hill talking about is including wind in Section 48 [of the tax code], which is where solar is — i.e., the ITC,” Kiernan said at an event hosted by AWEA.
Pursuit of ITC eligibility represents a major strategic shift for the onshore wind industry, and would appear to open avenues for cooperation as well as tension with the solar sector. Onshore wind, solar and natural-gas-fired plants now account for virtually all new generation capacity built in the country.
The U.S. wind industry, now approaching 100 gigawatts of installed capacity, secured a multiyear extension to its PTC in 2015 based in part on the argument that it would be the last one.
However, the solar industry received what is widely viewed as a better deal in the extension of its ITC. The wind PTC began phasing down in 2016 for new projects, but the ITC does not start its decline until next year. And while the PTC eventually drops to zero, solar’s ITC is set to remain permanently at a reduced level — a major advantage over time.
Up until now, the wind industry has seemingly been hesitant to ask for another PTC extension. In contrast, the solar industry has been openly calling for another ITC extension in the absence of federal climate and energy legislation.
AWEA is “talking a lot about parity” with lawmakers these days, Kiernan said. “Especially within wind, solar and storage, which are very much going to be central to the clean grid of the future.”
“At the end of the day, it’s politically simplest, strongest, and most powerful and impactful to have wind, solar and storage in the same section of the tax code — to have parity so we’re just charging forward with similar, if not the same, tax support.”
“Our longer-term strategy is bringing it all together, having parity and getting that ITC extended,” Kiernan added.
On stage with Kiernan, Chris Brown, president of sales and services in the U.S. and Canada at wind turbine supplier Vestas, pointed out that the solar industry has been asking for an ITC extension.
Kiernan’s response: “I’ve noticed.”
Asked whether the shift would mean wind projects would only be eligible for the ITC going forward and no longer the PTC, Kiernan said: “That’s likely the way it would end up.”
Long odds in D.C.
Industry leaders are often reluctant to talk about the competitive tensions between wind and solar, preferring instead to frame the discussion as renewables versus fossil fuels. But analysts believe wind will have an uphill battle against solar in the 2020s if the PTC/ITC disparity is allowed to persist.
“It would definitely be a problem [for wind],” said Mark Goodwin, CEO of developer Apex Clean Energy, which builds both wind and solar projects. “I think it’s even a problem from a messaging standpoint if solar gets a 30 percent, five-year extension and wind doesn’t [get an extension].”
“When we did the phaseout, I strongly supported it,” Goodwin said at AWEA’s event. But the country needs both wind and solar to thrive in the 2020s, Goodwin said, “not let one fall off because of the outdated PTC.”
Kiernan acknowledged that the odds of opening the ITC for onshore wind projects looks remote in the current political climate.
“End-of-year deals, especially tax extender deals, have happened before,” he said. “There’s a shot at it this year.”
“But I honestly don’t give it a big chance just given the dynamics,” Kiernan said. “The impeachment inquiry adds a whole other layer.”
Regardless of what happens in the battle for tax-credit extensions, the wind market is in the midst of its all-time biggest boom years. Wood Mackenzie expects the U.S. to add nearly 40 gigawatts of capacity in 2019-2021 as developers race to beat the PTC deadline.