Impact of Investment Tax Credit on Interconnection Costs

The report analyzes the impact of a 30% Investment Tax Credit (ITC) on interconnection costs for onshore wind and solar projects in the U.S. It finds that this credit could reduce overall project costs by 3% for solar and 1.7% for wind. More significantly, the analysis suggests the ITC could have bridged the cost gap for 22 GW of withdrawn projects and 15 GW of active projects across five regions, potentially bringing a total of 26-37 GW of capacity to fruition.

• Applying the Investment Tax Credit (ITC) to interconnection costs could reduce the overall average costs of completed utility-scale projects by 3 percent for solar and 1.7 percent for wind.
• A retrospective analysis across five regions covering 30 states indicates that an interconnection ITC could have covered the cost difference between cancellation and success for 22 GW of withdrawn onshore wind and solar projects.
• The ITC could have reduced costs for 15 GW of onshore wind and solar projects that remained active as of 2022, bringing them into the cost range of completed projects.
• The combined potential impact of the ITC on withdrawn and active projects (26-37 GW) could exceed the 31 GW of utility-scale wind and solar deployed in the U.S. in 2023.
• The Midcontinental Independent System Operator (MISO) region showed the highest potential for the ITC to impact project viability, with 11,872 MW of withdrawn solar and 8,364 MW of withdrawn wind projects falling within 30% of the 75th percentile of completed project costs.
• Grid interconnection is a primary driver of project failure, with over 60 percent of wind and solar developers citing it as a primary cause for project cancellation.

APA

Solomon, M., & O’Boyle, M. (2024). Impact of Investment Tax Credit on Interconnection Costs. Energy Innovation. https://energyinnovation.org/wp-content/uploads/Impact-of-Investment-Tax-Credit-on-Interconnection-Costs.pdf

Chicago

Solomon, Michelle, and Mike O’Boyle. Impact of Investment Tax Credit on Interconnection Costs. Energy Innovation, 2024. https://energyinnovation.org/wp-content/uploads/Impact-of-Investment-Tax-Credit-on-Interconnection-Costs.pdf.

Wikipedia

{{cite report |last1=Solomon |first1=Michelle |last2=O’Boyle |first2=Mike |title=Impact of Investment Tax Credit on Interconnection Costs |publisher=Energy Innovation |date=February 2024 |url=https://energyinnovation.org/wp-content/uploads/Impact-of-Investment-Tax-Credit-on-Interconnection-Costs.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{solomon2024impact, author = {Solomon, Michelle and O’Boyle, Mike}, title = {{Impact of Investment Tax Credit on Interconnection Costs}}, institution = {Energy Innovation}, year = {2024}, month = feb, url = {https://energyinnovation.org/wp-content/uploads/Impact-of-Investment-Tax-Credit-on-Interconnection-Costs.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }