General Electric Co. executives and spokespeople said Wednesday another congressional failure to extend a tax credit for renewable energy projects could put billions of dollars worth of future wind farms in jeopardy.

Steve Taub, a senior vice president of GE Energy Financial Services, said in a report Wednesday Congress' failure to create a stable tax policy for renewable energy has resulted in a pogo-stick-like pattern of capacity expansion and retraction.

The federal production tax credit (PTC) for solar, wind and other renewable power projects is set to expire on Dec. 31. It is indexed to inflation, so owners of wind farms receive a tax credit of 2.1 cents per kilowatt hour for the first 10 years of operation. The PTC was first instituted in 1992 to help encourage renewable energy sources and reduce pollution.

Taub's report showed when the production tax credit granted to wind projects was in effect capacity climbed in 1999 before dropping 90 percent in 2000, when it was unclear if Congress would renew it.

The PTC has lapsed three times since its inception: 1999, 2001 and 2003. But it has been available every year since 2005.

A concern among some in Congress is the need to generate revenue, but Taub said in his report there is a net revenue gain from taxes on the projects' income and suppliers to the projects and payroll taxes that makes up for the tax credit.

Despite making billions on wind turbine and wind farm deals, GE executives and spokespeople said the technology still needs subsidies to compete against established energy technologies, like natural gas and coal.
GE Energy Financial Services, of Stamford, invests in energy projects around the world. It is a separate division from GE Energy, which makes wind turbines.

But both divisions are recording strong revenues from wind projects, with the wind turbine maker announcing two deals in the first quarter worth a combined $2 billion.

"It's moving in that direction," Kevin Walsh, GE Energy Financial Services managing director of renewal energy, said when asked when the technology will no longer need subsidies but can compete in the free market. But, it's not there yet, he said.

Other countries are also subsidizing renewable technology, he said, through various means.

In Europe, the wind farms and other renewables collect higher fees from customers and ratepayers, while the U.S. uses a system that spreads the cost out among taxpayers.

Walsh said there are many ways to fund renewable technology, including the creation of a carbon tax that energy producers would pay, based on the amount of pollution they produce. That would also help wind be more competitive.

The costs for starting wind farms is coming down, Walsh said, but remains higher than natural gas fired or other older technology plants.

But he cautioned against a direct comparison.

Wind farms do have certain advantages in the long run, he said, including that the fuel is free and there isn't any pollution.

But they remain dependent upon the strength of the wind.

Andy Katell, a GE Energy Financial spokesman, said if the tax sunsets it could jeopardize some projects in the U.S.

In order to get the PTC, a project must be running by the end of this year, and Katell said. GE Energy Financial has to consider the risks involved in investing in such a project.

Calls to several organizations that have opposed tax incentives, including the Tax Foundation, were not returned Wednesday.

Rob Varnon, who covers business, can be reached at 330-6216.