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Wind Power Price Trends in the United States

Description: For the fourth year in a row, the United States led the world in adding new wind power capacity in 2008, and also surpassed Germany to take the lead in terms of cumulative installed wind capacity. The rapid growth of wind power in the U.S. over the past decade (Figure 1) has been driven by a combination of increasingly supportive policies (including the Federal production tax credit (PTC) and a growing number of state renewables portfolio standards), uncertainty over the future fuel costs and environmental liabilities of natural gas and coal-fired power plants, and wind's competitive position among generation resources. This article focuses on just the last of these drivers - i.e., trends in U.S. wind power prices - over the period of strong capacity growth since 1998.
Date: July 15, 2009
Creator: Bolinger, Mark & Wiser, Ryan
Partner: UNT Libraries Government Documents Department

Preliminary Evaluation of the Impact of the Section 1603 Treasury Grant Program on Renewable Energy Deployment in 2009

Description: Federal support for renewable energy deployment in the United States has traditionally been delivered primarily through tax benefits, including the production tax credit ('PTC') in Section 45 of the U.S. tax code, investment tax credits ('ITC') in Sections 25D and 48, and accelerated tax depreciation in Section 168. Many renewable power project developers are unable to use the majority of these tax benefits directly or immediately, however, and have therefore often relied on third-party 'tax equity' investors for the necessary investment capital in order to monetize the available tax benefits. As has been well-publicized, most of these tax equity investors were hit hard by the global financial crisis that unfolded in the last months of 2008 and, as a result, most either withdrew from the renewable power market at that time or reduced their available investment capital. This left a significant financing gap beginning in late 2008, and placed at some risk the continued near-term growth of renewable energy supply in the U.S. In recognition of these developments, the U.S. Congress passed two stimulus bills - The Energy Improvement and Extension Act ('the Extension Act') in October 2008 and The American Recovery and Reinvestment Act ('the Recovery Act') in February 2009 - parts of which were intended to address the growing shortage of finance for renewable power projects. Most notably, Section 1603 of the Recovery Act enables qualifying commercial renewable energy projects to choose between the Section 45 PTC, the Section 48 ITC, or a cash grant of equal value to the Section 48 ITC (i.e., 30% of the project's eligible basis in most cases). By giving developers the option to receive a 30% cash grant (administered by the U.S. Department of the Treasury) in lieu of either the ITC or the PTC, Congress hoped to 'temporarily fill the gap ...
Date: March 31, 2010
Creator: Bolinger, Mark; Wiser, Ryan & Darghouth, Naim
Partner: UNT Libraries Government Documents Department

The renewables portfolio standard in Texas: An early assessment

Description: Texas has rapidly emerged as one of the leading wind power markets in the United States. This development can be largely traced to a well-designed and carefully implemented renewables portfolio standard (RPS). The RPS is a new policy mechanism that has received increasing attention as an attractive approach to support renewable power generation. Though replacing existing renewable energy policies with an as-of-yet largely untested approach in the RPS is risky, early experience from Texas suggests that an RPS can effectively spur renewables development and encourage competition among renewable energy producers. Initial RPS targets in Texas will be far exceeded by the end of 2001, with as much as 930 MW of wind slated for installation this year. RPS compliance costs appear negligible, with new wind projects reportedly contracted for under 3(US)/242/kWh, in part as a result of a 1.7(US)/242/kWh production tax credit, an outstanding wind resource, and an RPS that is sizable enough to drive project economies of scale. Obliged retail suppliers have been willing to enter into long-term contracts with renewable generators, reducing important risks for both the developer and the retail supplier. Finally, the country's first comprehensive renewable energy certificate program has been put into place to monitor and track RPS compliance.
Date: November 1, 2001
Creator: Wiser, Ryan H. & Langniss, Ole
Partner: UNT Libraries Government Documents Department

Analyzing the interaction between state tax incentives and the federal production tax credit for wind power

Description: This study analyzes the potential impact of state tax incentives on the federal production tax credit (PTC) for large-scale wind power projects. While the federal PTC provides critical support to wind plants in the U.S., its so-called ''double-dipping'' provisions may also diminish the value of - or make ineffectual - certain types of state wind power incentives. In particular, if structured the wrong way, state assistance programs will undercut the value of the federal PTC to wind plant owners. It is therefore critical to determine which state incentives reduce the federal PTC, and the magnitude of this reduction. Such knowledge will help states determine which wind power incentives can be the most effective. This research concludes that certain kinds of state tax incentives are at risk of reducing the value of the federal PTC, but that federal tax law and IRS rulings are not sufficiently clear to specify exactly what kinds of incentives trigger this offset. State investment tax credits seem most likely to reduce federal PTC payments; the impact of state production tax credits as well as state property and sales tax incentives is more uncertain. Further IRS rulings will be necessary to gain clarity on these issues. State policymakers can seek such guidance from the IRS. While the IRS may not issue a definitive ''revenue ruling'' on requests from state policymakers, the IRS has in the past been willing to provide general information letters that can provide non-binding clarification on these matters. Private wind power developers, meanwhile, may seek guidance through ''private letter'' rulings.
Date: September 1, 2002
Creator: Wiser, Ryan; Bolinger, Mark & Gagliano, Troy
Partner: UNT Libraries Government Documents Department

Cherokee Nation Enterprises Wind Energy Feasibility Study Final Report to U.S. DOE

Description: CNE has conducted a feasibility study on the Chilocco property in north-central Oklahoma since the grant award on July 20, 2003. This study has concluded that there is sufficient wind for a wind farm and that with the Production Tax Credits and Green Tags, there will be sufficient energy to, not only cover the costs of the Nation’s energy needs, but to provide a profit. CNE has developed a wind energy team and is working independently and with industry partners to bring its renewable energy resources to the marketplace. We are continuing with the next phase in conducting avian, cultural and transmission studies, as well as continuing to measure the wind with the SoDAR unit. Cherokee Nation Enterprises, Inc. is a wholly-owned corporation under Cherokee Nation and has managed the Department of Energy grant award since July 20, 2003. In summary, we have determined there is sufficient wind for a wind farm at the Chilocco property where Cherokee Nation owns approximately 4,275 acres. The primary goal would be more of a savings in light of the electricity used by Cherokee Nation and its entities which totals an estimated eight million dollars per year. Cherokee Nation Enterprises (CNE), working independently and with industry partners, plans to bring its renewable energy resources into the marketplace through a well-documented understanding of our undeveloped resource. Our plan is to cultivate this resource in a way that will ensure the development and use for our energy will be in an environmentally and culturally acceptable form.
Date: April 30, 2006
Creator: Wyatt, Carol E.
Partner: UNT Libraries Government Documents Department

Financial Innovation Among the Community Wind Sector in the United States

Description: In the relatively brief history of utility-scale wind generation, the 'community wind' sector - defined here as consisting of relatively small utility-scale wind power projects that are at least partly owned by one or more members of the local community - has played a vitally important role as a 'test bed' or 'proving ground' for wind turbine manufacturers. In the 1980s and 1990s, for example, Vestas and other now-established European wind turbine manufacturers relied heavily on community wind projects in Scandinavia and Germany to install - and essentially field-test - new turbine designs. The fact that orders from community wind projects seldom exceeded more than a few turbines at a time enabled the manufacturers to correct any design flaws or manufacturing defects fairly rapidly, and without the risk of extensive (and expensive) serial defects that can accompany larger orders. Community wind has been slower to take root in the United States - the first such projects were installed in the state of Minnesota around the year 2000. Just as in Europe, however, the community wind sector in the U.S. has similarly served as a proving ground - but in this case for up-and-coming wind turbine manufacturers that are trying to break into the broader U.S. wind power market. For example, community wind projects have deployed the first U.S. installations of wind turbines from Suzlon (in 2003), DeWind (2008), Americas Wind Energy (2008) and later Emergya Wind Technologies (2010),1 Goldwind (2009), AAER/Pioneer (2009), Nordic Windpower (2010), Unison (2010), and Alstom (2011). Just as it has provided a proving ground for new turbines, so too has the community wind sector in the United States served as a laboratory for experimentation with innovative new financing structures. For example, a variation of one of the most common financing arrangements in the U.S. wind market ...
Date: January 19, 2011
Creator: Bolinger, Mark
Partner: UNT Libraries Government Documents Department

PTC, ITC, or Cash Grant? An Analysis of the Choice Facing Renewable Power Projects in the United States

Description: Renewable power technologies are inherently capital-intensive, often (but not always) with relatively high construction costs and low operating costs. For this reason, renewable power technologies are typically more sensitive to the availability and cost of financing than are natural gas power plants, for example. In the United States, the bulk of renewable project finance in recent years has been provided by 'tax equity investors' (typically large investment banks and insurance companies) who partner with project developers through highly specialized financing structures (Bolinger, 2009; Cory et al., 2008; Harper et al., 2007). These structures have been designed primarily to capitalize on federal support for renewable power technologies, which has historically come in the form of tax credits and accelerated depreciation deductions. The number of tax equity investors active in the renewable power market has declined precipitously, however, as a result of the financial crisis that began unfolding across the globe in the summer of 2008. The resulting shortage and increased cost of project financing has, in turn, slowed the development of new renewable power projects, leading to layoffs throughout the entire industry supply chain. In recognition of the fact that tax-based policy incentives are not particularly effective when tax burdens are shrinking or non-existent, Congress included several provisions in 'The American Recovery and Reinvestment Act of 2009' (ARRA 2009) designed to make federal incentives for renewable power technologies more useful. Among these provisions is one that allows projects eligible to receive the production tax credit ('the PTC', see Text Box 1) to instead elect the investment tax credit ('the ITC', see Text Box 2). Another provision enables ITC-eligible projects (which now include most PTC-eligible renewable power projects) to instead receive--for a limited time only--a cash grant of equivalent value. These two provisions (among others) could have a significant impact on how ...
Date: March 11, 2009
Creator: Bolinger, Mark; Wiser, Ryan; Cory, Karlynn & James, Ted
Partner: UNT Libraries Government Documents Department

U.S. Department of Energy Wind Turbine Development Projects

Description: This paper provides an overview of wind-turbine development activities in the Unites States and relates those activities to market conditions and projections. Several factors are responsible for a surge in wind energy development in the United States, including a federal production tax credit, ''green power'' marketing, and improving cost and reliability. More development is likely, as approximately 363 GW of new capacity will be needed by 2020 to meet growing demand and replace retiring units. The U.S. Department of Energy (DOE) is helping two companies develop next-generation turbines intended to generate electricity for $0.025/kWh or less. We expect to achieve this objective through a combination of improved engineering methods and configuration advancements. This should ensure that wind power will compete effectively against advanced combined-cycle plants having projected generating costs of $0.031/kWh in 2005. To address the market for small and intermediate-size wind turbines, DOE is assisting five companies in their attempts to develop new turbines having low capital cost and high reliability. Additional information regarding U.S. wind energy programs is available on the internet site www.nrel.gov/wind/. E-mail addresses for the turbine manufacturers are found in the Acknowledgements.
Date: April 26, 1999
Creator: Migliore, P. G. & Calvert, S. D.
Partner: UNT Libraries Government Documents Department

Apples with apples: accounting for fuel price risk in comparisons of gas-fired and renewable generation

Description: For better or worse, natural gas has become the fuel of choice for new power plants being built across the United States. According to the US Energy Information Administration (EIA), natural gas combined-cycle and combustion turbine power plants accounted for 96% of the total generating capacity added in the US between 1999 and 2002--138 GW out of a total of 144 GW. Looking ahead, the EIA expects that gas-fired technology will account for 61% of the 355 GW new generating capacity projected to come on-line in the US up to 2025, increasing the nationwide market share of gas-fired generation from 18% in 2002 to 22% in 2025. While the data are specific to the US, natural gas-fired generation is making similar advances in other countries as well. Regardless of the explanation for (or interpretation of) the empirical findings, however, the basic implications remain the same: one should not blindly rely on gas price forecasts when comparing fixed-price renewable with variable-price gas-fired generation contracts. If there is a cost to hedging, gas price forecasts do not capture and account for it. Alternatively, if the forecasts are at risk of being biased or out of tune with the market, then one certainly would not want to use them as the basis for resource comparisons or investment decisions if a more certain source of data (forwards) existed. Accordingly, assuming that long-term price stability is valued, the most appropriate way to compare the levelized cost of these resources in both cases would be to use forward natural gas price data--i.e. prices that can be locked in to create price certainty--as opposed to uncertain natural gas price forecasts. This article suggests that had utilities and analysts in the US done so over the sample period from November 2000 to November 2003, they would have found ...
Date: December 18, 2003
Creator: Bolinger, Mark & Wiser, Ryan
Partner: UNT Libraries Government Documents Department

Electricity Generation Cost Simulation Model (GenSim)

Description: The Electricity Generation Cost Simulation Model (GenSim) is a user-friendly, high-level dynamic simulation model that calculates electricity production costs for variety of electricity generation technologies, including: pulverized coal, gas combustion turbine, gas combined cycle, nuclear, solar (PV and thermal), and wind. The model allows the user to quickly conduct sensitivity analysis on key variables, including: capital, O&M, and fuel costs; interest rates; construction time; heat rates; and capacity factors. The model also includes consideration of a wide range of externality costs and pollution control options for carbon dioxide, nitrogen oxides, sulfur dioxide, and mercury. Two different data sets are included in the model; one from the US. Department of Energy (DOE) and the other from Platt's Research Group. Likely users of this model include executives and staff in the Congress, the Administration and private industry (power plant builders, industrial electricity users and electric utilities). The model seeks to improve understanding of the economic viability of various generating technologies and their emissions trade-offs. The base case results, using the DOE data, indicate that in the absence of externality costs, or renewable tax credits, pulverized coal and gas combined cycle plants are the least cost alternatives at 3.7 and 3.5 cents/kwhr, respectively. A complete sensitivity analysis on fuel, capital, and construction time shows that these results coal and gas are much more sensitive to assumption about fuel prices than they are to capital costs or construction times. The results also show that making nuclear competitive with coal or gas requires significant reductions in capital costs, to the $1000/kW level, if no other changes are made. For renewables, the results indicate that wind is now competitive with the nuclear option and is only competitive with coal and gas for grid connected applications if one includes the federal production tax credit of 1.8cents/kwhr.
Date: November 1, 2002
Partner: UNT Libraries Government Documents Department

Wind Power Outlook 2004

Description: The brochure, expected to be updated annually, provides the American Wind Energy Association's (AWAE's) up-to-date assessment of the wind industry. It provides a summary of the state of wind power in the U.S., including the challenges and opportunities facing the industry. It provides summary information on the growth of the industry, policy-related factors such as the federal wind energy production tax credit status, comparisons with natural gas, and public views on wind energy.
Date: January 1, 2004
Creator: anon.
Partner: UNT Libraries Government Documents Department

Impact of Financial Structure on the Cost of Solar Energy

Description: To stimulate investment in renewable energy generation projects, the federal government developed a series of support structures that reduce taxes for eligible investors--the investment tax credit, the production tax credit, and accelerated depreciation. The nature of these tax incentives often requires an outside investor and a complex financial arrangement to allocate risk and reward among the parties. These financial arrangements are generally categorized as 'advanced financial structures.' Among renewable energy technologies, advanced financial structures were first widely deployed by the wind industry and are now being explored by the solar industry to support significant scale-up in project development. This report describes four of the most prevalent financial structures used by the renewable sector and evaluates the impact of financial structure on energy costs for utility-scale solar projects that use photovoltaic and concentrating solar power technologies.
Date: March 1, 2012
Creator: Mendelsohn, M.; Kreycik, C.; Bird, L.; Schwabe, P. & Cory, K.
Partner: UNT Libraries Government Documents Department

Concentrating Solar Deployment System (CSDS) -- A New Model for Estimating U.S. Concentrating Solar Power (CSP) Market Potential: Preprint

Description: This paper presents the Concentrating Solar Deployment System Model (CSDS). CSDS is a multiregional, multitime-period, Geographic Information System (GIS), and linear programming model of capacity expansion in the electric sector of the United States. CSDS is designed to address the principal market and policy issues related to the penetration of concentrating solar power (CSP) electric-sector technologies. This paper discusses the current structure, capabilities, and assumptions of the model. Additionally, results are presented for the impact of continued research and development (R&D) spending, an extension to the investment tax credit (ITC), and use of a production tax credit (PTC). CSDS is an extension of the Wind Deployment System (WinDS) model created at the National Renewable Energy Laboratory (NREL). While WinDS examines issues related to wind, CSDS is an extension to analyze similar issues for CSP applications. Specifically, a detailed representation of parabolic trough systems with thermal storage has been developed within the existing structure.
Date: April 1, 2006
Creator: Blair, N.; Mehos, M.; Short, W. & Heimiller, D.
Partner: UNT Libraries Government Documents Department