General Electric says the tax credit system set up to encourage renewable power needs an overhaul.Tax credits for wind and other green power sources are due to sunset later this year.
General Electric is a major player in the wind energy market, and the Fairfield companyâ€™s energy financing arm has just completed an analysis of how the federal governmentâ€™s tax credits affect the business. Wind farms receive a tax credit of 2.1 cents per kilowatt hour for the first ten years of operation, and some in Congress are concerned how that may affect revenues.
But GEâ€™s analysis says over the life of any given project, there is a net gain from taxes that more than offsets the credit. The tax credits have been allowed to lapse three times since the system was put in place in 1992, and report author Steve Taub says that thatâ€™s had a big effect on the industry.
"In the past when this tax credit has expired the amount of activity in the wind industry in the United States has dropped off by 70 to 90 percent. And weâ€™re already beginning to see that impact again with the uncertainty over whether it will be renewed after December 31st of 2008. Weâ€™re already starting to see people who are trying to accelerate projects to get them completed by the end of this year, and if they canâ€™t do that then put the brakes on the projects because they donâ€™t know if theyâ€™re going to have this tax credit which is very important to the pricing of the power theyâ€™re going to sell as well as the financing of the projects."
GE says if the federal government is serious about encouraging renewable power options the industry needs a stable, long term policy, until it is able to compete in the open marketplace.