Wind farms more than pay their way

The tax revenue generated from US wind farms far exceeds the value of the tax breaks offered to renewable energy projects, which are controversially due to expire at the end of this year.

That is the conclusion of a study from GE Energy Financial Services, which calculated that the net benefit to the US Treasury of those wind farms built in 2007 and supported by renewable energy tax credits stands at $250m (£127m). It argued that while the tax credits exempt the project from paying tax directly from the projects' income, vendors' profits and individual workers' salaries more than pay for the cost of the tax break.

The study comes as shares in US wind and solar firms dipped this week after the Senate again blocked a bill designed to extend the tax credits past the end of this year. Republican opposition to the bill was centred on Democrat plans to finance the tax credits by rescinding tax breaks for the oil industry, closing a tax loophole for hedge funds and delaying a planned tax break for multinationals.

However, Kevin Walsh, managing director of renewable energy at GE Energy Financial Services, argued that the debate over how to finance the tax credits was ignoring the revenue benefits attached to renewable energy projects. "Our study shows that the wind farms more than pay for themselves through existing tax revenues, so it is time to renew the incentives immediately," he said.

The study argued that in addition to generating $250m in net value for the Federal Treasury, wind farm projects also provide an estimated $6m (£3m) per year in local property taxes, $15m (£7.6m) annually in state income taxes on wages and profits during construction and $1.5m (£760,000) per year in taxes while operating. Projects undertaken in 2007 alone also created more than 17,000 construction-related jobs and 1,600 long-term operations-related jobs.

Experts claim that should the tax credit be allowed to lapse, the impact on the US wind energy sector would be disastrous. The tax credits have expired three times in the past nine years, each time resulting in a drop in installed capacity of between 76 and 90 per cent.

"Congress' repeated failure to act could derail the wind energy industry at the worst possible time for the economy, placing 76,000 jobs and more than $11.5bn (£5.8bn) in investment at risk," warned Randall Swisher, executive director of the American Wind Energy Association.