Revealing the Hidden Value that the Federal Investment Tax Credit and Treasury Cash Grant Provide To Community Wind Projects

Although the global financial crisis of 2008/2009 has slowed wind power development in general, the crisis has, in several respects, been a blessing in disguise for community wind project development in the United States. For example, the crisis-induced slowdown in the broader commercial wind market has, for the first time since 2004, created slack in the supply chain, creating an opportunity for shovel-ready community wind projects to finally proceed towards construction. Many such projects had been forced to wait on the sidelines as the commercial wind boom of 2005-2008 consumed virtually all available resources needed to complete a wind project (e.g., turbines, cranes, contractors). More importantly and to the point of this report, the financial crisis spawned two major stimulus packages in the U.S. that, in combination, have fundamentally reshaped the federal policy landscape for wind power in general, and for community wind projects in particular. Most notably, qualifying wind projects can now, for a limited time only, choose either a 30% investment tax credit (ITC) or a 30% cash grant in lieu of the production tax credit (PTC) that wind has historically received. To qualify for the 30% ITC, projects must be placed in service by the end of 2012. To qualify for the 30% cash grant, projects must either be operational by the end of 2010, or else must begin construction by then and be placed in service by the end of 2012. It stands to reason that community wind, which has had more difficulty using the PTC than has commercial wind, may benefit disproportionately from this newfound ability to choose among these federal incentives. This report confirms this hypothesis. Just as importantly, however, and not to be overlooked, are a handful of ancillary benefits that accompany the 30% ITC and/or cash grant, but not the PTC. This report demonstrates that these ancillary benefits could, in aggregate, be worth even more to a typical community wind project than the greater face value provided by the 30% ITC or cash grant relative to the PTC. Quantitative analysis of these ancillary benefits may also inform the development of a policy agenda for community wind, by revealing which of these benefits are most valuable to the sector.