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While the Production Tax Credit (PTC) has traditionally applied to new installations, the 4-year extension and phase-out of the PTC passed in 2015 has incentivized a number of asset owners to consider repowering or retrofitting existing wind power assets to re-qualify projects under PTC eligibility guidance from the U.S. Internal Revenue Service in order to receive another 10 years of tax credits. Repowering aging assets creates an opportunity to realize substantial returns from increased annual energy production while deploying significantly less capital than would be required for a new project.
To re-qualify an existing asset, owners must invest 80% of the fair market value (FMV) of the asset, achieved through repowering or retrofitting. MAKE estimates the total capacity likely to be repowered under this mechanism to be upwards of 6 GW, with a capital investment of more than $2 billion per year. Given the scale of this “80-20” campaign, MAKE will use the following methodology to account for such cases in its products and is publicizing it for the sake of transparency, clarity and standardization.
- To re-qualify an existing asset, owners must invest 80% of the fair market value (FMV) of the asset
- The total capacity likely to be repowered under this mechanism is estimated to be upwards of 6GW
- Repowering methods come in three forms: Traditional repowering, 80-20 repowering, and retrofitting
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