Indications are that Big Wind will not stop until it gets a PTC extension!
While it’s not clear Congress when Congress will take up another spending bill, AWEA is now circulating the attached letter for signatures. We should assume that some congressional members, especially Sen. Grassley (R-IA), are encouraging Big Wind. (ICYMI Grassley posted this AWEA press release on the same date the letter started circulating: https://www.grassley.senate.gov/news/news-releases/grassley-celebrates-wind-energy-becoming-iowa-s-largest-source-electricity )
AWEA’s mission is to secure COVID-19 ‘stimulus’ by showing how big wind is feeling the same pain due to COVID as felt by the airline, hospitality, and food services industries. AWEA’s Ask is two-fold:
Ask 1: One-year extension to the IRS’ 4-year development window.
The extension will enable projects that started construction in 2016 and 2017 to receive full or 80% PTC benefits if placed in service in 2021 and 2022 respectively. AWEA insists that without a 1-year extension, roughly 25,000 MW of wind energy will be at risk due to COVID.
This is false!
Before the Mar 14 COVID shutdown, Wood Mackenzie was already reporting that 9000 MW out of 15,000 MW in 2016 safe harbored turbines were expected to spill into 2021. This 9000 MW spillover has nothing to do with COVID and everything to do with Big Wind mismanaging its delivery and construction timelines.
Remember that any MWs that spill into 2021 would automatically be eligible for 80% PTC benefits which are still substantial. (see Table). Also, projects that miss the 2020 deadline can still secure 100% PTC if they meet the IRS’ continuous progress test. But Big Wind is now openly admitting it cannot meet the test. Of course not. With a 4-year window to work within, there was never any intention to meet the test.
The question is how did a 9,000 MW self-inflicted problem grow to 25,000 MW inside of a month? Simple! Big Wind developers are looking back at a stock pile of turbines they decided three years ago would have to settle for an 80% PTC and they’re now hoping for all of it to be 100% PTC eligible! A 1-year extension to the development window would fix things nicely.
Financial Impact on Big Wind
|PTC Benefit||# MW||Capacity Factor||Tax credits over 10 years|
|100% ($25/mwh)||1 MW||45%||$985,500|
|80% ($20/mwh)||1 MW||45%||$788,400|
|Net reduction in PTC benefit if settling for 80% PTC: $197,100|
Ask 2: Re-introduction of a cash grant program.
Similar to the Section 1603 grants enacted in 2009 (now expired), grants would provide direct cash outlays from Treasury to developers in lieu of tax credits and bypass tax equity financing altogether.
The largest associated with direct cash payments would be substantial – and unjustified. There is no evidence the tax equity market has been harmed by COVID. JP Morgan and Bank of America which together represent 50% of the tax equity market supporting big renewables have each said they’re on track in 2020 to meet and exceed their 2019 numbers. Projects are still being financed and moving forward. The 2020 COVID slow-down in no way mimics the financial collapse seen in 2008 when tax equity dried up. AWEA is grossly misrepresenting the facts for financial gain.
The bottom line is that Big Wind is hoping to take advantage of the COVID crisis while covering up its own mismanagement. This is all about earning 100% PTC vs 80% (60%) PTC. In addition to AWEA’s letter, I’ve attached the list of email addresses representing the chiefs of staff and legislative directors for key legislators. Please take time this week to make your thoughts known to Congress.
Congressional contacts are below: