Bailout Package

The US Congress just approved the bank bailout package.  Interestingly, the bill has a one year extension to the Production Tax Credit (PTC), which is worth 1.9 cents/kWh for 10 years.  The extension had bipartisan support, but somehow never found its way onto legislation.  Until now.  What are the implications for the wind business?

The PTC is far more generous than the EcoEnergy program run by the Canadian government.  The EcoEnergy program pays only 1 cent per kWh, and unlike the US incentive, which is a credit against taxes, the incentive is taxable.  And of course it is in Canadian dollars.


In the past when the PTC has expired, the US wind industry would go into a major slump, with new installations plunging by as much as 90%.  Most forecasters were predicting that the slump would not have been that big this time, as over half of the States have incentives and mandates in place for renewable energy.  But no doubt losing 1.9 cents/kWh would have cancelled many projects.


The US was 25% of the world market for wind turbines last year.  If the US market were to pause, it would have a significant effect on the world demand for wind turbines.  Wind turbines have been hard to get, and prices have been high, as the business has been struggling to keep up with demand. 


The extension of the PTC will keep the US market strong, and will keep wind turbines in short supply, and with high prices.  Those devising policies in Canada should pay attention.  The price for wind generated electricity will need to be higher than it perhaps would have been.  But then again, the price for all power is higher today.

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