The CEOs of six large US renewable energy development firms expressed the need for the country’s Congress to extend the Investment Tax Credit (ITC) and the Production Tax Credit (PTC) for solar and wind, in order to keep projects on track in this new strange world.
Michael Garland of Pattern Energy, Paul Gaynor of Longroad Energy, Miguel Prado of EDP Renewables North America, James Torgerson of Avangrid, Guy Vanderhaegen of Origis Energy and Tom Werner of SunPower talked with Keith Martin, Partner, Norton Rose Fulbright about their revised outlooks for project development in 2020.
Martin said 2020 was supposed to be a peak year for wind and solar development and asked how the outlook had changed with the pandemic.
Most of the CEOs said that projects that are already under construction and that were scheduled to be completed over the summer are not seeing delays, yet. But all acknowledged that we are still very early in this crisis.
Prado said that “capacity additions scheduled for this summer are already under the last phases of construction,” adding that EDP has more than 1 GW of renewable energy capacity under construction.
But delays are very likely to be coming.
“I think projects probably are going to get delayed and pushed out. It really depends on how bad it gets,” said Origis Energy’s Vanderheagen.
Origis Energy develops utility-scale solar and energy storage projects and is based in Miami. The company says its total project capacity is over 1GW.
“I think there are going to be some [projects] that the supply chain logistics and other things particularly on the solar side will slow things down and will spill over into future years, said Longroad Energy’s Gaynor.
Longroad owns 1.2 GW of wind and solar projects across the U.S. and operates a total of 2.4 GW of wind and solar projects.
Prado said EDP had received some “force majeure” notices for some of its contracts. A force majeure notice relates to the inability to fulfill a contract due to unforeseeable circumstances.
Tax Credit Extension Required
The solar investment tax credit (ITC) is set to drop from 26 per cent for projects completed in 2020 to 20 per cent for projects completed in 2021 and the wind production tax credit (PTC) was set to expire at the end of 2019 but got a last-minute extension to the end 2020. So if projects that were set to be completed in 2020 get pushed into 2021, those delays could prove very costly. That’s why the developers are asking the U.S. Congress for an extension.
“We are all actively working to try to create some form of PTC extension ITC extension for wind and solar,” said Pattern Energy’s Garland.
Pattern owns 28 renewable energy projects with an operational capacity of more than 4 GW in the United States, Canada and Japan.
Longroad’s Gaynor said that for projects that were expected to enter the financing market in the second half of 2020 “I think it’s a total toss-up right now if they get done.” A toss-up because of the uncertainty in the market, he clarified.
“I think it goes back to how much clarity there is in the market with respect to any kind of ITC or PTC legislation,” he added.
Avangrid’s Jim Torgerson, who just announced he’s retiring in June said he thinks that “projects that are scheduled for the latter part of the year could very well see some delays,” he said in the webcast. “Then it’s a matter of the PTC [and] getting extensions on that from the IRS.”
SunPower’s CEO Tom Werner said he definitely sees “storm clouds.” SunPower develops residential rooftop solar, commercial and industrial (C&I) solar, and utility-scale projects. He said residential at least in California has “challenges” but said that “origination activity in both residential and C&I is still quite good.”
“How can it be good if it relies on knocking on doors,” asked Martin.
Werner said the company does a lot of origination activity online and therefore hasn’t seen as much of a dip as one might expect.
“We have daily tracking of indicators of demand. In resi [market] there is some impact but in commercial it’s actually quite good,” he said.
But a tax credit extension would very much help, agreed the developers.
Torgerson is hopeful that the US Congress will extend it. “I’ve got to believe any way they would see this as being able to extend those PTCs,” he said of the crisis.
Werner added: “We all have mentioned what is happening in congress and if something good happens there it could have a direct impact and could reverse the possible pushdown.”
Originally published on renewableenergyworld.com