GE says U.S. renewables tax credit pays for itself

BOSTON, June 18 (Reuters) - General Electric Co GE.N released a study on Wednesday arguing that a U.S. tax credit for renewable energy projects generates more revenue for the federal government than it costs.

The study by United States’ leading maker of electricity-generating wind turbines found that wind farms built last year that benefited from the credit will generate $250 million more in tax revenue over their lifetime than the program cost.

The tax credit, intended to encouragement investment in sustainable energy projects like wind farms, which currently represent about 1 percent of overall U.S. electricity production, is due to expire at the end of this year.

The latest effort to renew the credit failed in the Senate on Tuesday.

Steve Taub, senior vice president of investment strategy at GE Energy Financial Services, who did the analysis, said it showed that the credit pays for itself over a 25-year time period.

“There is a time element here, but over time you could almost look at this as an investment, you essentially give some tax breaks up front to get the payoff later,” he said.

GE’s $250 million payoff assumption assumes it takes about two years to build the wind farms and that they run for 20 to 25 years. It does not take into account taxes paid to state or local governments or environmental benefits.

The tax credit currently runs for 10 years and is worth 2.1 cents per kilowatt hour of power generated. It lapsed in 1999, 2001 and 2003 and each time was followed by a drop-off in the number of new wind farms built.

A study by the American Wind Energy Association found that U.S. wind power grew by 45 percent last year, to 16,818 megawatts -- enough to power about 4.5 million homes.

GE has forecast that its 2008 wind revenues will hit $6 billion. Its competitors in the wind turbine market include Germany's Siemens AG SIEGn.DE and Denmark's Vestas Wind Systems A/S VWS.CO. (Reporting by Scott Malone, editing by Leslie Gevirtz)