Clean Energy MLPs Gain Momentum

A group of U.S. senators, including Alaska Senator Lisa Murkowski, the top Republican on the energy committee, and Senator Chris Coons, a Delaware Democrat, reintroduced the Master Limited Partnerships Parity Act (MLPPA) to help investors lower the cost of capital for renewable-energy projects, according to Bloomberg. Some analysts estimate that the bill could reduce the cost of capital by as much as 50%, says Yahoo Finance.

At issue: the significant funding required to get power plants that turn wind and sunlight into electricity up and running.  Some investors shy away from putting money into green energy companies because the technologies necessary for wind and solar power lack a solid track record, according to Daniel Poneman, the deputy U.S. energy secretary who’s overseeing the Department of Energy until a successor is named.

The MLPPA would provide incentives that make renewables more attractive to investors by allowing such projects take advantage of a tax-advantaged corporate structure known as master-limited partnerships.

According to Forbes, MLPs and REITs will help put more institutional capital into play, noting that this legislation alone won’t open the floodgates to renewable energy investment.  “Just as shale gas developers were supported with roughly $10 billion in tax credits, along with millions more in research and development funding, the Production Tax Credit and Investment Tax Credit remain essential tools within the renewable energy industry,” says Forbes green tech contributor and president, Ceres and Director, Investor Network on Climate Risk (INCR).

Pew Charitable Trust’s green energy program also applauded the bi-partisan sponsors of the MLPPA.  Director Phyllis Cuttino, notes that, “nations with consistent, transparent clean energy policies do better in attracting private investment. “This bill is an important step toward providing the clean energy sector with consistent, long-term policy that can help leverage private capital and provide certainty to investors and companies alike.”

Not everyone agrees that every tax credit is worthy of energy causes.  Think tank The Heritage Foundation says that while Congress should allow all energy project investors to form MLPs, “it should also remove economically unjustified tax credits for both conventional and renewable energy sources and technologies while lowering the corporate tax rate to encourage investment.”

Congress could further spur investment by allowing companies to expense their full capital costs immediately, according to Nicolas Loris, writing for Heritage.

To read the full Bloomberg article cited in this story, click here

To read the full Forbes article cited in this story, click here

To read the Heritage Foundation comments cited in this story, click here

To read the Pew Charitable Trusts statement cited in this story, click here



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