US renewable energy project pipeline surged in 4th quarter 2020
The US renewable energy market continued to make positive strides in the fourth quarter of 2020, according to the latest data from the Energy Information Administration (EIA), as around 5.3 gigawatts (GW) of new development projects were announced in October and nearly 700 megawatts (MW) of new utility solar and wind generating capacity came online. Furthermore, the renewables sector is poised to carry added momentum into 2021 after Congress in December extended federal tax incentives that are pivotal in underpinning the growth of clean energy.
As part of a Covid-19 relief package bill, Congress extended the Production Tax Credits (PTC) and Investment Tax Credits (ITC) by one and two years, respectively. As a result, wind projects that begin construction by the end of 2021 can now qualify for the PTC at 60% of the full rate, or at $15 per megawatt hour (MWh), and will be required to be operational by the end of 2025. Meanwhile, utility scale solar plants that commence construction before the end of 2022 will retain the rate of 26% credit on expenditure, falling to 22% in 2023, and then to 10% in 2024 for larger scale projects, while expiring for small scale solar plants. After 2024, the 10% rate is expected to apply for large projects.
These measures will undoubtedly provide more relief for projects hit by delays caused by the Covid-19 pandemic, while also helping to maintain the growth trajectory of renewable energy in the next five years.