Work

A note on energy sourcing and Federal Tax Credits to wind investments

Year: 2025

Type: article

Abstract: The Production Tax Credit (PTC) has been critical for U.S. wind power expansion. I show that replacing the PTC with a subsidy designed to optimally vary by contract type increases wind capacity deployment while significantly reducing the fiscal cost of subsidization. • Cost-effective subsidy (CES) depends on the contract type chosen by developers. • Replacing flat PTC with CES lowers the fiscal cost of wind subsidies. • CES does not reduce net wind capacity additions compared to flat PTC. • CES can raise expected net wind capacity additions.

Source: Economics Letters

DOI: 10.1016/j.econlet.2025.112334

Author: Felipe Gomez-Trejos

Institution: Tulane University

Language: English

Topic: Renewable energy and sustainable power systems

Subfield: Renewable Energy, Sustainability and the Environment

Field: Energy

Domain: Physical Sciences

SDGs: Affordable and clean energy, Climate action, Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $3,030