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Title: Master Limited Partnerships and Real Estate Investment Trusts: Opportunities and Potential Complications for Renewable Energy

Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs) are two proposed investment vehicles which have the potential to lower renewable energy assets' high cost of capital; a critical factor in the Department of Energy's goal for renewable energy to achieve grid-parity with traditional sources of electric generation. Due to current U.S. federal income tax laws, regulations, and administrative interpretations, REITs and MLPs cannot finance a significant portion of the cost of renewable energy assets. Efforts are underway to alter these rules by changing the definition of 'real property' (REIT) and 'qualified income' (MLP). However, even with rule changes, both investment vehicles have structural challenges to efficiently finance renewable energy assets. Among them are 1) effectively utilizing the U.S. federal income tax incentives; 2) administratively structuring the investments to not be overly onerous or complicated, given the potential for pooling a relatively large amount of small assets; and 3) attracting and retaining a large enough investment community to participate in the funding opportunities. This report summarizes these challenges so that if proposed federal changes are made, stakeholders have an understanding of the possible outcomes.
Authors:
;
Publication Date:
OSTI Identifier:
1110461
Report Number(s):
NREL/TP-6A20-60413
DOE Contract Number:
AC36-08GO28308
Resource Type:
Technical Report
Research Org:
National Renewable Energy Laboratory (NREL), Golden, CO.
Sponsoring Org:
USDOE Office of Energy Efficiency and Renewable Energy Solar Energy Technologies Program
Country of Publication:
United States
Language:
English
Subject:
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION MLP; REIT; MASTER LIMITED PARTNERSHIP; REAL ESTATE INVESTMENT TRUST; PUBLIC FINANCE; TAX EQUITY; PUBLIC CAPITAL; PROJECT FINANCE; SOLAR FINANCING; SECURITIZATION; PRODUCTION TAX CREDIT; INVESTMENT TAX CREDIT; TREASURY 1603; Energy Analysis; Integrated Applications