While the PTC offers $0.22/kWh for the first ten years of a project, the ITC offers 30% of a project's installed capital costs. Although any US wind developer with a qualifying project may opt for either credit, the ITC typically has distinct advantages for offshore and community-based plants.
In general, the distinction is based on project capacity versus cost. "You'd probably do modelling in order to determine which credit works best," said Greg Jenner, a partner at law firm Stoel Rives. "If you have low costs and high capacity, then you're naturally going to lean towards the PTC."
No offshore history
While offshore projects are routinely more costly than utility-scale onshore projects, their overall US economics are unproven.
"The production, operation and maintenance history of offshore can't be assessed yet in the United States because we have no operating history," said Jim Lanard, president of the Offshore Wind Development Coalition. "Hence, the ITC provides a significant value over the PTC."
Lanard expects two significant offshore projects to qualify for the ITC under the January extension - Cape Wind off the Massachusetts coast at roughly 420MW and Deepwater Wind's 30MW pilot project off Rhode Island.
Community projects, meanwhile, are usually small and built without economies of scale. Also, they are often sited near the ownership community rather than in the windiest locations.
"The ITC extension means people are still in business," said Lisa Daniels, executive director of community-wind advocacy Windustry.
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