Renewable Tax Extenders: The Bridge to the Clean Power Plan

Rhodium Group / by John Larsen and Whitney Herndon
http://bit.ly/1SjfYAB

At the end of 2015, Congress passed a budget deal that included a surprise multi-year extension and phase-down of two key federal tax incentives for renewable energy – the Production Tax Credit (PTC) and Investment Tax Credit (ITC). In this note we provide the first long-term outlook for utility scale wind and solar with the tax extenders in place and discuss the implications for compliance with the Environmental Protection Agency’s (EPA’s) power sector CO2 regulations, also known as the Clean Power Plan (CPP). We find that:

Tax extenders change the game for CPP compliance: Without the tax extenders, the least-cost CPP compliance pathway would be a shift from coal generation to Natural Gas Combined Cycle (NGCC) generation. The tax extenders fundamentally change the game. We expect wind and solar to cut off the surge of NGCC generation and become the technology of choice for the entire CPP compliance period…

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