The complex financial analysis that has driven renewable energy investment has become the standard for assessing all potential electric generation investments.
Elias Hinckley is senior manager at the National Energy Tax Services Practice, Deloitte Tax LLP. Contact him at firstname.lastname@example.org.
Any utility, generation company, or developer must consider numerous factors before investing in new electric generation capacity in the U.S. market. In addition to the traditional financial analysis of capital costs and operational expenditures, other important factors materially can affect the development cost and financial viability of a new generation facility. Three of these financial considerations—tax incentives, renewable portfolio standards, and the creation of renewable energy credits1 and carbon2 constraints—have been examined in conjunction with renewable-energy projects. No longer is that the case; the convergence of these economic considerations will affect the value proposition significantly for every potential generation investment made in the United States.