Economic Valuation of a Geothermal Production Tax Credit
The United States (U.S.) geothermal industry has a 45-year history. Early developments were centered on a geothermal resource in northern California known as The Geysers. Today, most of the geothermal power currently produced in the U.S. is generated in California and Nevada. The majority of geothermal capacity came on line during the 1980s when stable market conditions created by the Public Utility Regulatory Policies Act (PURPA) in 1978 and tax incentives worked together to create a wave of geothermal development that lasted until the early 1990s. However, by the mid-1990s, the market for new geothermal power plants began to disappear because the high power prices paid under many PURPA contracts switched to a lower price based on an avoided cost calculation that reflected the low fossil fuel-prices of the early 1990s. Today, market and non-market forces appear to be aligning once again to create an environment in which geothermal energy has the potential to play an important role in meeting the nation's energy needs. One potentially attractive incentive for the geothermal industry is the Production Tax Credit (PTC). The current PTC, which was enacted as part of the Energy Policy Act of 1992 (EPAct) (P.L. 102-486), provides an inflation-adjusted 1.5 cent per kilowatt-hour (kWh) federal tax credit for electricity produced from wind and closed-loop biomass resources. Proposed expansions would make the credit available to geothermal and solar energy projects. This report focuses on the project-level financial impacts of the proposed PTC expansion to geothermal power plants.
- Research Organization:
- National Renewable Energy Lab. (NREL), Golden, CO (United States)
- Sponsoring Organization:
- US Department of Energy (US)
- DOE Contract Number:
- AC36-99-GO10337
- OSTI ID:
- 15000422
- Report Number(s):
- NREL/TP-620-31969; TRN: US200325%%267
- Resource Relation:
- Other Information: PBD: 1 Apr 2002
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
29 ENERGY PLANNING
POLICY AND ECONOMY
09 BIOMASS FUELS
14 SOLAR ENERGY
BIOMASS
CAPACITY
ECONOMICS
ELECTRICITY
ENERGY POLICY
GEOTHERMAL ENERGY
GEOTHERMAL INDUSTRY
GEOTHERMAL POWER PLANTS
GEOTHERMAL RESOURCES
PRICES
SEVERANCE TAX
SOLAR ENERGY
TAX CREDITS
US PUBLIC UTILITY REGULATORY POLICIES ACT
Geothermal Legacy
GEOTHERMAL
CALIFORNIA
NEVADA
PRODUCTION TAX CREDIT
PTC
PURPA
THE GEYSERS
MARKET
ENERGY POLICY ACT
ENERGY POLICY AND ANALYSIS