Impacts of Federal Tax Credit Extensions on Renewable Deployment and Power Sector Emissions (NREL)
The U.S. National Renewable Energy Laboratory (NREL) estimates geothermal capacity will grow to over GW 8 by 2030 with a little help from federal tax credits
Federal tax credits for renewable energy (RE) have served as one of the primary financial incentives for RE deployment over the last two decades in the United States. In December 2015, RE tax credits, including the wind power production tax credit and solar investment tax credits, were extended as part of the Consolidated Appropriations Act of 2016. The act extended the solar and wind tax credit deadlines by five years from their prior scheduled expiration dates, but included ramp downs in tax credit value during the latter years of the five-year period. This report explores two specific questions: (1) How might RE deployment in the contiguous United States change with these recent federal tax credit extensions? (2) How might this change in RE deployment impact carbon dioxide (CO2) emissions in the power sector?
Across all scenarios, installed geothermal capacity is estimated to grow significantly over the next fifteen years relative to the industry’s starting point; however, absolute growth relative to wind and solar capacity is more limited. We estimate incremental geothermal capacity, as driven by the two-year geothermal PTC extension, to be about 200 MW in 2018, but this incremental boost is estimated to be short-lived. The tax credit extensions are estimated to result in net negative impacts to geothermal capacity during the early 2020s as higher value is provided to solar and wind at the expense of geothermal. By 2030, the tax credit extensions have little impact on installed geothermal capacity.
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