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Expiring Federal Tax Incentive for Wind Energy Needs to Be Renewed - GE Study

Posted on: Thursday, 19 June 2008, 09:00 CDT

GE Energy Financial Services has unveiled a study estimating that a federal tax incentive set to expire on December 31, 2008, for wind energy projects more than pays for itself through tax revenues from the projects' income, vendors' profits and individual workers' wages. The company said that these incentives should be renewed, as the tax incentive regime is working well.

The study, released at the American Council on Renewable Energy's Renewable Energy Finance Forum in New York, has estimated that wind farms built in 2007, supported by the production tax credit, carry a net present value benefit to the US Treasury of $250 million.

The production tax credit for wind, as well as similar incentives for solar and other renewable energy sources, has expired three times in the past nine years, each time causing a 76%-90% drop in installed capacity from the previous year. The most recent attempt to renew the incentive failed in June 2008 in a US Senate vote that centered on how to offset the cost of the production tax credit with tax revenues.

According to the study by GE Energy Financial Services, wind projects that went into operation in 2007 generate federal income tax revenues from the projects, individual workers' wages, vendors' profits, and land leases.

The report noted that these wind farms also provide federal tax revenue after 10 years, when the production tax credits expire. In addition to those federal tax revenues, the wind projects generate an estimated $6 million per year in local property taxes, $15 million annually in state income taxes on wages and profits during construction and $1.5 million per year in taxes while operating.

Kevin Walsh, managing director of renewable energy at GE Energy Financial Services, said: "Congress is debating how to pay for the wind tax credits perhaps without realizing that, over time, wind farms pump more money into the US Treasury and state and local coffers than they take out. Our study shows that the wind farms more than pay for themselves through existing tax revenues, so its time to renew the incentives immediately."

Source: Datamonitor

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