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.
- Research Organization:
- National Renewable Energy Lab. (NREL), Golden, CO (United States)
- Sponsoring Organization:
- USDOE Office of Energy Efficiency and Renewable Energy Solar Energy Technologies Program
- DOE Contract Number:
- AC36-08GO28308
- OSTI ID:
- 1110461
- Report Number(s):
- NREL/TP-6A20-60413
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
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