The US wind and solar power industries face a fall in investment in 2017 after tax credits expire, their trade body has warned as it appeals to politicians for more financial support.
Plunging costs for wind and solar power have made them increasingly competitive against fossil fuels, but the American Council on Renewable Energy argues that the fall in the price of natural gas caused by the US shale boom means they still need additional tax breaks.
Investment in both wind and solar power continues to grow and is expected to increase into next year, but is set to drop sharply in 2017, according to forecasts from Bloomberg New Energy Finance.
The tax credit for wind power expired at the end of 2014 but the impact has been delayed because projects that had started construction by the cut-off date remained eligible. Installations of new wind capacity are expected to drop 73 per cent, from 8.4 gigawatts in 2016 to 2.3GW the following year.
With a reduction in the credit for solar power scheduled for the end of 2016, new solar photovoltaic installations are expected to drop 46 per cent from 10.8GW in 2016 to 5.8GW in 2017.
Dan Reicher, Acore’s interim president, said that although the cost of renewable energy was still falling, wind and solar power faced competition from unexpectedly cheap gas-fired generation.
US natural gas prices have dropped from more than $12 per million British thermal units in 2008 to less than $2.80 today, and the futures market puts the price at less than $4.50 per mBTU as far out as 2025.