Solar economics: The PTC vs. ITC decision

Under the Inflation Reduction Act (IRA) signed into law in 2022, solar projects may now opt for either an investment tax credit (ITC) or a production tax credit (PTC). What’s at stake for solar developers across the country is making a choice between an upfront investment-based incentive versus a production-based incentive applicable for the project’s first ten years of operations. This decision of whether to opt for PTC or ITC is a balancing act that depends on three primary considerations: expected capacity factor, investment (capital and financing) costs, and bonus eligibility.  

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