Production Credit Phaseout to Curb Wind Projects

January 25, 2019

EIA expects wind capacity to increase from 96 GW at the end of 2018 to 107 GW at the end of 2019 and to 114 GW by the end of 2020. Because wind capacity is often added at the end of the calendar year, increases in generation frequently lag increases in capacity for the year they occur and are reflected in the generation for the next year.

The build out of new wind capacity through 2020 is strongly affected by the phase out of the federal Production Tax Credit (PTC) for wind, which began with projects under construction starting after 2016. Such projects take several years to complete, and the last tranche of projects eligible for the full $25 per megawatthour tax credit will start to enter service in significant numbers in 2019. Activity will taper off in later years as projects started in 2016 approach the limit of their safe harbor provisions and as the construction pipeline begins to shrink, reflecting reduced PTC pay offs for projects beginning construction in 2017 and later.