U.S. Tax Credit Would Increase Green Power by 50 Percent

An extension of the U.S. tax credit for wind turbines and biomass generation facilities would increase green power output by 50 percent by 2020, according to a government analysis.

WASHINGTON, DC, US, 2002-01-04 [SolarAccess.com] The ‘Annual Energy Outlook 2002′ from the Energy Information Administration predicts that renewable energy will generate 15 gigawatts by 2020, based on the assumption that the current production tax credit for turbines and closed-loop biomass sources will expire on December 31, as currently mandated. EIA released that Reference Case forecast on November 14, and has just released alternative forecasts to examine what would happen under non-standard scenarios. The current tax credit is indexed to inflation and currently worth US 1.7 cents per kilowatt-hour for the first ten years of generation. The alternative case assumed that the credit would be extended to facilities commissioned by the end of 2006, including open-loop biomass and landfill gas facilities, as proposed in ‘Securing America’s Future Energy Act of 2001.’ That extension would increase total wind, biomass and LFG capacity by an additional 7 gigawatts by 2020, above the Reference Case level of 15 GW. “Generation from natural gas, coal and renewable fuels is projected to increase through 2020 to meet growing demand for electricity and offset the projected retirement of some existing fossil-fuel-fired and nuclear units,” says the new assumptions. “Renewable technologies are projected to grow slowly because of the relatively low costs of fossil-fired generation and because competitive electricity markets favor less capital-intensive natural gas technologies over coal and baseload renewables.” “With higher expected levels of industrial cogeneration and wind and geothermal generation, total renewable generation, including cogenerators, is projected to increase by 1.3 percent per year to a 2020 level.” As the economy grows, energy demand in the United States is projected to increase 32 percent from 2000 to 2020, reaching 131 quadrillion Btu assuming no changes in federal laws. The forecast could be slower with higher penetration of renewable energy and energy efficient technologies. Technology improvement will be a key factor in future energy demand, concludes the EIA report, with the price of natural gas expected to be US$3.26 per thousand cubic feet by 2020 under the reference case, but ranging from $2.73 to $4.06 depending on the progress of technology. Production would 4 percent higher with good progress, but 9 percent lower in the slow case. In the reference case, 10 percent of current nuclear generation will be retired by 2020, with no new reactors expected due to economics. As a result, nuclear capacity declines from 98 to 88 GW between 2000 and 2020 while, if no aging-related capital expenditures are required, there would be fewer retirements and nuclear capacity would not drop below 92 GW. The outlook for 2002 considers the impacts of higher and lower economic growth than contained in the reference case, and factors in an analysis of the recent California crisis and the status of electricity restructuring. EIA is the statistical agency within the U.S. Department of Energy.
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