Friday, December 17, 2010

New England renewable energy projects aided by R&D tax credits

By Kyle Alspach

Companies doing research and development, buying equipment or developing renewable energy projects in New England will get a boost from the country’s massive tax cuts package, industry associations said Friday.

The package, worth $858 billion, extends an R&D tax credit for two years and extends a cash grant for renewable energy projects for one year. The package also includes an incentive for businesses to invest in new equipment in 2011.

The extension of the tax credit promoting R&D is of particular importance, said Brian Gilmore, executive vice president at the Associated Industries of Massachusetts. “That’s the lifeblood of our economy,” Gilmore said.

The tax credit entitles companies to deduct from their tax liability their expenses directly related to R&D activities — such as for hiring and equipment, he said.

The equipment incentive, meanwhile, allows companies to expense 100 percent of their capital expenditures next year.

On renewable energy, the package extends a cash grant for projects such as wind and solar power for one year. The grant was set to expire at the end of the year.

“This will have a very significant impact,” said Peter Rothstein, president of the Boston-based New England Clean Energy Council. “It will enable hundreds of millions of dollars in renewable energy projects in Massachusetts.”

The grants originated in stimulus and provide 30 percent of the cost of a project. Developers say they’ve been able to get the grants quickly, as opposed to tax credits, which took much longer to provide benefits to developers. The grants, Rothstein said, “are critical to the financing” of renewable energy projects.

Among the projects that could benefit is Cape Wind, Rothstein said. The 468-megawatt Nantucket Sound project would be the nation’s first major offshore wind farm.

The package, negotiated between President Obama and congressional Republicans, extends all of the Bush-era income tax cuts, which were scheduled to expire Dec. 31, for two years. It also gives workers a one-year payroll tax cut and extends emergency unemployment benefits for 13 months.

Additionally, the package extends tax breaks for the working poor, college students and individuals with children.
The package was headed to Obama on Friday for his signature after the U.S. House passed the bill by a 277-148 vote a few seconds before midnight Thursday. The Senate had passed the bill Wednesday by an 81-19 margin.