Since solar and wind growth began taking off, the two renewable sources have had plenty of support from the U.S. government, which in turn drove the industries to new innovations.
For wind power, this began in 1992; the government pays wind farmers 2.3 cents per kilowatt-hour generated by their turbines.
Solar’s tax breaks began in 2005, and offer a 30% reimbursement from the cost of a solar project.
Unfortunately, these credits are both about to stop.
The wind credit is technically over anyway, since projects had to have started construction by 2014. As for solar, that 30% reimbursement offer will be off the table by the end of next year. After that, only commercial solar projects will get a 10% reimbursement instead.
Sounds a bit like that’s the end of growth for the two most popular forms of renewable energy, right?
Not necessarily…
CEO of SunEdison Ahmad Chatila says, “If the PTC (production tax credit) runs out we will be fine, we can get by.”
Likewise, the head of NextEra’s renewable development unit Armando Pimentel claims that the reduction in renewable energy tax breaks will merely slow, not stop the growth of renewable power.
While the loss of reimbursement is likely to increase prices for these energy sources somewhat, that increase is expected to be minimal.
What’s more, the cost of a solar or wind system has dropped dramatically in the last few years.
New innovations are being made every day, and the solar sector especially is ramping up efficiency.
Even without the government funding, there’s still a lot of potential, which means plenty of investments still to be made.
Companies are already factoring a lack of tax breaks into their future business plans. As evidenced by the optimistic quotes above, there’s still more than enough bullish sentiment to go around.
To continue reading…
Click here to read the Bloomberg article.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
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