With a five-year phaseout of the PTC expected to be part of the package that Congressional negotiators are trying to work out, these thoughts provide some insight on the potential PTC extension:
- Any multi year extension will be beneficial to the industry. A key benefit will be to smooth out the “rush to deal”, which has resulted in developers being forced to accept unfavorable power purchase agreement terms and strained the capacity of certain players like yieldcos to absorb the product.
- The development side would benefit from a more orderly market and stop the boom and bust cycle.
- From the utilities perspective, it could also assist with the planning process many are involved in to displace fossil fuel loads with renewable power, as it would take the pressure off to sign up renewables at favorable prices before the subsidies expire and permits a more measured approach.
- Whenever an industry is forced to respond to tax deadlines, the inevitable result is inefficiency and less perfect products than might otherwise be the case, and that is what has been going on in recent years in many cases with the continually expiring subsidies.
- It would be good to allow the industry to proceed forward responding to the business needs of the grid rather than the political drama of expiring energy tax code provisions.
This article was first published in Windpower Engineering & Development, December 8, 2015. The original article can be found here.