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Impact of Policy Uncertainty on Renewable Energy Investment: Wind Power and Production Tax Credit (PTC)

Sources:

University of California at Berkeley

Authors:

Merrill Jones Barradale

Date:

1 January 2007

This report discusses the pattern of repeated expiration and short-term renewal of the federal production tax credit that causes a boom-bust cycle in wind power plant investment in the United States. This on-off pattern is detrimental to the wind industry, since ramp-up and ramp-down costs are high, and players are deterred from making long-term investments. Various alternative policy incentives are considered and compared in terms of their perceived reliability for supporting long-term investment.