Renewable energy companies like Vestas and Gamesa have formed a coalition to advocate for a level playing field with fossil fuel companies that will allow average Americans to invest in renewable projects the way they do in oil, gas and coal, with the same tax advantages.
The Financing America’s Investment in Renewables (FAIR) coalition supports allowing master limited partnerships (MLPs), a business structure that facilitates investment in qualifying projects, for renewable projects – so far it has only been allowed for fossil fuel projects. Oil, gas and coal investors have had access to the tax benefits that come with the MLP structure for decades.
The coalition’s founders include First Wind, OWN Energy, Everpower, Invenergy, Geronimo, Pattern Energy, Juwi Solar, Keybanc Utility, Power and Renewables, Terra-Gen Power, and TradeWind Energy.
An MLP is taxed as a partnership, but its ownership interests are traded on an exchange like corporate stocks. This enables the state and federal tax benefits of a partnership, with the liquidity of a publicly traded company. MLPs have generated the abundant and affordable capital that has built the nation’s modern oil and gas infrastructure.
The founders emphasize how lowering the cost of renewable energy projects will enable consumers to pay less for renewable energy. More investments will lead to more projects, which will snowball into more jobs and sources of revenue for local communities, they say.
The changes to the bi-partisan MLP Parity Act were recently re-introduced in both the US House and Senate. The FAIR Coalition believes that the MLP Parity Act will not be a substitute for the production tax credit or investment tax credit, but could create a complement to those credits as part of a long-term renewable energy tax policy.
A March study by the Climate Policy Initiative found significant barriers to increases in institutional investment in renewable energy projects, although developers often look to institutional investment as a source of capital to reduce the cost of wind and solar projects.
The report, The Challenge of Institutional Investment in Renewable Energy, finds that for the developed world there is not a shortage of potential investment in renewable energy but rather a shortage of opportunities at the price and risk-level to entice institutional investors such as pension funds and insurance companies.