The developer of the US’ biggest wind farm in terms of megawatts, which is due to get even bigger, said Friday it will not pursue expansion into 2013 if the production tax credit is not extended by Congress.
Terra-Gen Power’s 1,020-MW Alta Wind farm in Tehachapi, California, is expected to reach 1,320 MW by the end of the year. The phased-in facility, located in Kern County about 115 miles north of Los Angeles, has separate power purchase agreements carved out from a 1,550-MW master power purchase agreement with Southern California Edison and is seen as helping the investor-owned utility meet the state’s ambitious renewable portfolio standard.
However, what has been built thus far and what is under construction is less than half of what was originally conceived in 2006 as a 3,100-MW project.
That ambition is now in question as the Treasury Department’s 1603 “cash grant in lieu of tax credits” program dries up for wind developers at the end of this year, when the alternative, the production tax credit, is also due to expire.
Terra-Gen is in much the same position as other big wind farm developers such as NextEra Energy Resources, Iberdrola Renewables and Horizon Wind Energy, which have each said they will not be building new wind farms next year without the PTC.
Spokesman Greg Wetstone said Friday that Terra-Gen’s expansion of Alta Wind in 2013 “is very much contingent on Congress passing the PTC extension.”
Though many Democrats and some Republican Representatives and Senators have supported a PTC extension, a vote on it is not expected until after the presidential election in early November.
Even in the lame-duck Congress the possibility of extension is seen as tied to the two political parties striking a deal on the larger issues of extending the Bush tax cuts and Social Security payroll tax cuts.
Since March 2010 banks have on four occasions helped ArcLight Capital Partners and Global Infrastructure Partners, owners of Terra-Gen, raise more than $2.8 billion for Alta Wind’s first nine phases.
Each capital raising relied, in part, on the projects receiving cash reimbursements under the US Treasury’s 1603 program, which reimburses developers 30% of the cost of construction once the projects are connected to the grid.
In 2011 the owners and partners in Alta Wind phases 1 through 5, which have a combined capacity of 660 MW, received approximately $445 million in reimbursements from Treasury. By the end of this year, the owners and partners of phases 6 through 9 are expected to be reimbursed another $445 million.
Wind-farm developers were anticipating using the PTC next year to replace 1603 cash as a capital-raising tool.
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