What: Shares of wind farm owner Pattern Energy Group Inc (NASDAQ:PEGI) popped 16.8% in December after the company got a huge boost from Congress.
So what: Solar companies got a lot of attention in December after the solar investment tax credit was extended. But alongside that extension was an extension of the wind production tax credit. This is a credit of 2.3 cents per kWh of production from wind that has come and gone from the tax code for years. In December, it was extended through 2016 with a phase-down of 20% per year after that until it reaches 0 in 2020.
Pattern CEO Mike Garland says the incentive will allow the company to build more assets in coming years, especially with a long-term policy in place.
Now what: This was a direct financial benefit to Pattern Energy Group, but it also gave certainty to a wind industry that's had years of up and down incentives. In 2013, when the PTC expired briefly the number of wind installations dropped 92%, and since it can take years to plan projects, a long-term phase-down is the right move.
I think this is just the start for a company like Pattern Energy Group, and 2016 will be a strong year for the company. A dividend yield of 7.1% also makes the stock an attractive investment, and with renewed growth opportunities, there is upside ahead.