The US federal government's extension of tax subsidies for wind and solar energy may drive investment in renewable energy projects that are key to President Obama’s economic stimulus package despite a pause in significant new investment in the sector, according to a new report.

Congress passed the production and investment tax credits last year as part of the Emergency Economic Stabilization Act, which extended wind energy and refined coal production by one year while geothermal and hydro-power among others were extended by two years. Tax credits for investment in solar energy for residential and commercial projects were extended by eight years.