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US to smash wind installation record in 2020: WoodMac

But major bottlenecks in logistics and interconnection mean another 8.1GW will either miss out on the 100% production tax credit or be cancelled

The US wind market will add a record 14.6GW of capacity in 2020 but major bottlenecks in both logistics and interconnection mean another 8.1GW will either not qualify for the federal production tax credit (PTC) at full value or be cancelled, according to latest research by Wood Mackenzie Power & Renewables.

The consultancy group had earlier identified about 23GW of capacity as under construction or contracted for commercial operation next year.

Developers are rushing to complete projects by the end of next year to qualify them for 100% PTC, or $24/MWh for electricity sent to the grid over their first decade of operation. The bottlenecks, however, are delaying the amount and timing of wind capacity that will come online.

In late 2015, Congress delineated a 100%-80%-60%-40% PTC phase-down schedule starting in 2016 and due to conclude at the end of this year. To become PTC-eligible at each of those levels, projects must have completed construction within four years.

Wood Mackenzie’s forecast assumes 6.6GW of projects scheduled for 2020 will not reach completion by the end of this year but will connect to the grid in 2021.

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In a report, it estimates that roughly 1.5GW of additional capacity will be cancelled outright – typically ahead of project construction beginning – with any attached off-takers likely choosing solar PV resources for subsequent PPAs to replace the lost generation.

“Although the PTC phase-out schedule has been in place since 2015, eventual off-takers were slow to act on procuring new capacity, yielding relatively subdued installation totals in 2017 and 2018,” said Anthony Logan, senior analyst and lead author of the report.

He added that deals with virtually every off-taker category have increased dramatically in the last six to 12 months.

“The lack of available logistical resources will begin to cause schedule rearrangements and delays that will grow more apparent during the first and second quarters of 2020,” he said.

Wood Mackenzie forecasts the US will add 12.3GW of wind power in 2021, before bottoming out at 5.9GW in 2024. The 2021 forecast would be the third highest for any year in the US, surpassed only by the 2020 forecast and 13.1GW in 2012.

Solar PV, which benefits from the 30% solar Investment Tax Credit (ITC), is beginning to compete with onshore wind on cost. While also phasing down starting in 2020, the ITC will settle at a permanent 10% in 2023 for utility-scale projects after the wind PTC disappears – meaning PV will often win out versus wind, according to Logan.

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