Democrats and Republicans both agree they want to renew the crucial renewable energy tax credits that make wind and solar development possible but can’t agree on how to fund the credits. But what GE says the legislators are missing is the fact that these tax credits actually put more money back into federal, state and local treasuries than they take out. GE Energy Financial Services and the American Council on Renewable Energy released a study today which says the production tax credit “more than pays for itself through tax revenues from the projects’ income, vendors’ profits and individual workers’ wages.”
Using a model developed by the National Renewable Energy Laboratory, GE estimates that the $2.5 billion in production tax credits the government doled out last year for wind will yield $2.75 billion in taxes over the lifetime of the wind projects — a $250 million return for the U.S. Treasury. And that’s just the federal government’s slice. GE estimates the wind industry generates $6 million a year in local property taxes, as well as $15 million in income taxes during construction and $1.5 million a year once turbines are in operation. So what do you say, Congress? Will you renew the tax credits now?
Unfortunately, it’s not looking good. Just yesterday renewal of the production tax credit, which benefits wind power, and the investment tax credit, which helps finance solar projects, died in debate. While it might be a good long term investment, Congress can’t agree where to get the estimated $7 billion over 10 years it would take to renew the credits.
Currently, the production tax credit subsidizes wind energy at 2.1 cents per kilowatt-hour (kWh) and is set to expire at the end of 2008. In the past nine years, the tax incentives have lapsed three separate times, each time resulting in a 76 to 90 percent drop in installed wind capacity from the previous year.
Figures courtesy of GE.