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See the body of the diary: it's a tax credit for each kWh produced, which allows wind projects to get more income for their production without having to sell their production at prices higher than the market will give them.

Typically, a wind project will sell its electricity to a local utility for 3-4c/kWh (usually under a long term fixed price contract) and get an additional 2c/kWh (inflated) via the PTC for the first 10 years.

The higher (and very stable when you have a fixed pirece power purchase agreement) revenue levels make the project able to service debt even during periods of low wind. The cash waterfall is simple: revenu is used first to pay ongoing operating costs, then debt costs (which are fixed if you used a fixed interest rate), and whatever's left, which is likely to be quite volatile goes to the investor.

Depending on the project, the investor and the country, debt can cover 70 to 90% of the initial investment.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sat Jan 19th, 2008 at 09:39:49 AM EST
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