Funding challenge ahead for US developers

UNITED STATES: US renewable energy developers will need to find new sources of funding after stimulus-inspired cash payments to the sector expire at the end of this year, according to a report from Bloomberg New Energy Finance.

The report found that tax subsidies, including the $0.022/kWh production tax credit, will again become the most important support mechanism for the industry.

But the demand for third-party investors able to use the credits exceeds the appetite of established tax equity providers.

Credits are expected to reach $2.4 billion for the wind sector alone in 2012 and more than $7 billion once other renewable-generation technologies are added in

There is, however, a "vast pool" of potential new tax equity supply, the study notes, pointing to the fact that the 500 largest public companies in the US alone paid $137 billion in taxes over the past year.

"The participation of even a small number of these firms in the tax equity market for renewable energy could narrow the gap between demand and supply."