Cree to get tax credits for expansion
Durham-based lighting maker Cree Inc. will receive $30 million in tax credits from the U.S. Department of Energy for an expansion of its manufacturing operations in Durham and in Racine, Wis., the department announced Thursday.
The company, which designs and makes LEDs, or light-emitting diodes, as a more efficient lighting source, plans to buy, install and modify new machines to make 304 million “next generation” LED lighting systems, according to the energy department’s release.
“With this project, Cree is taking the next step toward its goal of making traditional lighting products obsolete through the use of advanced LED technology with significant estimated annual energy savings,” information in the release stated.
Cree’s award was just a slice of a $150 million pie announced by the U.S. Department of Energy on Thursday. Twelve businesses were announced as recipients of tax credits for clean energy manufacturing initiatives, including for wind energy, smart grid, and fuel efficient vehicle technologies. The projects must be in service by 2017.
The awards were given as part of a second round of funding doled out through the Advanced Energy Manufacturing Tax Credit Program to support investments in domestic manufacturing equipment.
Initially, the tax credit program was funded with $2.3 billion in dollars from the 2009 American Recovery and Reinvestment Act that was passed to try to help get the nation’s economy out of recession. In the program’s first round of funding, Cree received $39 million in tax credits.
Peter Wahlstrom, a senior analyst with the investment research firm Morningstar, said that speaking generally, Cree is still looking to expand in the LED and alternative lighting market.
“Remember, Cree is still in expansion mode where they’re trying to do a land-grab, effectively, of the LED and alternative lighting space,” he said.
Wahlstrom said the “big push” right now is in LED light bulbs for commercial and residential use. He said the residential market is not untapped, but is under-penetrated.
“I would just reiterate that it’s still an under-penetrated market, particularly on the residential side,” he said. “There is a lot of need for innovation, and Cree has been very active in lowering the overall cost of the bulbs, which should increase adoption.”
He said the challenge is that there are “a lot of other companies” trying to do that too.
“So they’re all trying to take advantage of rebates and Energy Star qualifications, and things like that,” he said. “Cree seems to be doing very, very well currently.”
Attempts to reach Cree officials for comment on the second award were not successful Friday.