The Business Energy Investment Credit for Solar and Wind Energy

In response to a congressional request, GAO reported on the possible effects of extending the 15-percent Business Energy Investment Credit for solar and wind energy systems to 1990, or alternatively to the mid-1990's.

GAO found that solar and wind projects involve new systems not yet commercially demonstrated and, as such, the private sector perceives them as being inherently risky. Almost all of the companies GAO interviewed believed that the credit for solar and wind energy systems needs to be extended to help make those systems suitable for a large market. They pointed out that the long lead times required to plan and construct projects often preclude them from completing those projects prior to the credit's expiration. GAO noted that investors, utilities, laboratories, and Department of Energy program officials generally agreed that a 5-year extension would help commercialize the solar and wind energy systems and would probably not result in windfalls. However, the Department of the Treasury, which expects to benefit from the expiration of the credit, contends that the credit for solar and wind energy is not needed, arguing that tax credits are a highly inefficient mechanism for providing Government subsidies. GAO concluded that the possible revenue loss to Treasury is uncertain, making impossible the development of estimates that are sufficiently precise to be meaningful.