United States

United States

Finance vehicle could bring 'billions' into renewables

UNITED STATES: Giving renewable energy developers access to capital markets through the creation of master limited partnerships (MLPs) could bring $3.2 billion-$5.6 billion of new investment into the sector between now and 2021, according to a study.

MLPs are traded on stock exchanges like corporations, but pay no corporate taxes. Instead, income passes through the partnership to individual investors who pay on their personal tax returns.

This ability to access stock market investors, combined with the favourable tax treatment, allows MLPs to secure capital at a lower cost.

"It’s a very attractive financing vehicle," said Joe Mikrut, a principal with Capitol Tax Partners.

The study, by the Maguire Energy Institute at Southern Methodist University and released at the American Wind Energy Association conference in Atlanta, found that although MLPs are widely employed in the oil and gas sector, "arbitrary restrictions in the tax code" prevent their use by the renewable energy sector.

The industry has been pushing to have that changed, said Mikrut. "We just want to get a level playing field by having renewables in the mix as well," he added.

He said Senator Christopher Coons, a Democrat from Delaware, is expected to introduce a bill soon that would allow renewable energy investments to qualify for MLP status.

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