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

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  • Gomez-Trejos, Felipe

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.

Suggested Citation

  • Gomez-Trejos, Felipe, 2025. "A note on energy sourcing and Federal Tax Credits to wind investments," Economics Letters, Elsevier, vol. 252(C).
    • Handle: RePEc:eee:ecolet:v:252:y:2025:i:c:s0165176525001715
    DOI: 10.1016/j.econlet.2025.112334
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    References listed on IDEAS

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    1. Joseph E. Aldy & Todd D. Gerarden & Richard L. Sweeney, 2023. "Investment versus Output Subsidies: Implications of Alternative Incentives for Wind Energy," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(4), pages 981-1018.
    2. Olivier De Groote & Frank Verboven, 2019. "Subsidies and Time Discounting in New Technology Adoption: Evidence from Solar Photovoltaic Systems," American Economic Review, American Economic Association, vol. 109(6), pages 2137-2172, June.
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    Keywords

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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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