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Friday, May 15, 2009
Renewable energy tech installers already booming from stimulus funds
By Galen Moore
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MHT's Efrain Viscarolasaga: Solar installation booms in New England
MHT reporter Efrain Viscarolasaga on NECN: Green tech brings jobs back to Mass.
About a third of the federal government’s $787 billion American Recovery and Reinvestment Act will be given out in the form of tax relief, and that’s not necessarily good news for the venture economy.
At startups, spending decisions rarely hang on tax liability. In New England’s startup-heavy economy, tax credits for buying equipment and building renewable manufacturing facilities are likely to have a muted impact.
However, one segment of New England’s high-tech economy is seeing a ray of sunshine in the $288 billion of planned tax-relief stimulus. Companies that install solar panels, wind turbines, geothermal heating and other green energy equipment are seeing a dramatic increase in orders, as businesses and homeowners take advantage of improved federal tax credits.
The stimulus bill is making tax credits for renewable energy installations available as a check in hand, in the form of a grant for 30 percent of each project’s cost.
“We’re on track to do double the business in 2009 that we did in 2008,” said Jonathan Abe, vice president of business development at Nexamp Inc. The North Andover company installs wind, solar and geothermal systems for home-owners and businesses.
The new tax relief has had its greatest impact in states — like Massachusetts — that double up on federal incentives with their own rebate programs, said Elias Hinckley, U.S. leader for alternative energy tax at the accounting firm Deloitte LLP.
Most New England states have such programs in place or on the way, but state-administered rebate programs in Maine and Connecticut are oversubscribed and have stopped accepting applications for the time being.
Abe said in Massachusetts, where a state-administered rebate program has knocked 40 percent off the cost of solar installations, businesses and homeowners can get back about 85 percent of an alternative energy investment in the first year.
Another tax relief program included in the stimulus package offers a credit worth 30 percent of the cost to build any new renewable energy manufacturing facilities. Wilbraham-based wind turbine maker FloDesign Inc. is looking for a site to build a factory, but tax credits likely won’t impact its decision making, said chairman Stanley Kowalski III.
“Tax credits assume that you’ve got profits,” Kowalski said. “Pre-revenue, it doesn’t do anything for us.”
The federal stimulus bill also brought back a depreciation bonus, first introduced after Sept. 11, 2001, that allows businesses to deduct half the cost of new equipment they buy or lease-to-buy in the first year they put it to use. In addition, it raised to $250,000 the limit on a tax deduction that allows companies to claim the entire value of smaller capital investments in year one.
Boston Financial and Equity Corp. leases high-tech equipment to venture-backed life sciences and clean tech companies, but the new tax incentives aren’t lighting a fire under the company’s customers, said CEO Debbie Monosson.
“In my world, it’s never been about the tax benefits,” Monosson said.
A trio of stimulus tax relief initiatives
Going green: Businesses that install renewable energy equipment may claim a 30 percent tax credit immediately in the form of a grant.
Manufacturing: Renewable energy equipment manufacturers may claim tax credits worth 30 percent of the construction cost on new facilities.
Equipment: Businesses that make large investments in buying or leasing-to-buy new equipment may claim a depreciation deduction worth half its value in the first year they put it to use. The cap on 100 percent depreciation deductions is lifted to $250,000.
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