MLP bill could lower clean energy financing costs by up to 50%
April 25, 2013 | By
Barbara Vergetis Lundin
If passed, bipartisan legislation introduced yesterday -- the Master Limited Partnership (MLP) Parity Act -- could provide more opportunities throughout the industry to mobilize private capital for clean energy projects. A master limited partnership is a business structure that has the tax advantages of a partnership but whose ownership equity can be traded as easily as public stock. Energy projects qualifying as a master limited partnership have access to low-cost capital and liquid investment opportunities as well as a relatively high rate of return for investors. Traditionally, this tax mechanism has been available throughout the oil and gas industry for fossil fuel extraction and pipeline projects, but could not be applied to clean energy projects. If approved by Congress, the Master Limited Partnership Parity Act It would provide the same tax treatment for investments in clean energy and fossil fuels. By expanding the list of qualifying projects to include solar, wind, geothermal, and other clean energy and transmission technologies, renewable-power projects could access new financing markets, thereby increasing investment and deployment. "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," said Phyllis Cuttino, director of Pew's clean energy program. If approved, financing costs for clean energy projects could be lowered by as much as 50 percent in some cases, according to waste energy producer Recycled Energy Development. But the benefits are not only financial. "MLPs will increase private investment in the [energy] technology markets, leveling the playing field…by allowing the public to participate directly in this growing sector and, ultimately, in their energy future," said Brad Roberts, Executive Director of the ESA. For more: © 2013 FierceMarkets. All rights reserved. http://www.fierceenergy.com http://www.fierceenergy.com/story/mlp-bill-could-lower-clean-energy-financing-costs-50/2013-04-25 |