Lawrence Berkeley National Laboratory (LBNL) and the National Renewable Energy Laboratory (NREL) are pleased to announce the release of a joint report titled “PTC, ITC, or Cash Grant? An Analysis of the Choice Facing Renewable Power Projects in the United States.” This report was funded by the U.S. Department of Energy.
Signed into law one month ago, The American Recovery and Reinvestment Act of 2009 (“the stimulus bill”) contains a number of provisions that could have a significant impact on how U.S. renewable power projects are financed over the next few years. Among these provisions is one that allows projects eligible to receive the production tax credit (PTC) to instead elect the investment tax credit (ITC). Another provision enables ITC-eligible projects, which now include most PTC-eligible renewable power projects, to instead receive a cash grant of equivalent value. Both of these provisions are in place for a limited time only.
The purpose of this report is to both quantitatively and qualitatively analyze, from the project developer/owner perspective, the choice between the PTC and the ITC, or equivalent cash grant, for a number of different renewable power technologies. Technologies analyzed include wind, open- and closed-loop biomass, geothermal, and landfill gas projects. The factors addressed in this report suggest that most wind, open- and closed-loop biomass, and landfill gas projects may benefit more from the ITC than they will from the PTC. Furthermore, based on qualitative considerations alone, it is reasonable to expect those projects that are placed in service or begin construction in 2009 or 2010 to elect the equivalent cash grant rather than the ITC itself. Geothermal projects, on the other hand, are likely to prefer the PTC, unless qualitative considerations overwhelm quantitative. The full report can be downloaded at eetd.lbl.gov/EA/EMP/reports/lbnl-1642e.pdf