New Approaches in Renewable Energy Finance

The briefing examines the limitations of current U.S. federal tax incentives for renewable energy, which often require complex tax-equity arrangements. It proposes expanding the use of Master Limited Partnerships (MLPs) via the MLP Parity Act, seeking IRS clarification on Real Estate Investment Trusts (REITs), and utilizing the JOBS Act of 2012 to enable crowdfunding for small-scale projects to lower the cost of capital.

• Current U.S. federal tax incentives for renewable energy, such as tax credits and accelerated depreciation, primarily benefit companies with significant tax liabilities, forcing developers into complex tax-equity financing arrangements that limit available capital.
• There is a significant gap between the demand and supply of tax equity finance for renewable energy in 2012; Bloomberg New Energy Finance estimates demand at $7 billion, while the U.S. Partnership for Renewable Energy Finance suggests available finance could be as low as $3.6 billion.
• The Master Limited Partnerships Parity Act (S.3275) seeks to allow renewable energy projects to use the MLP structure, which avoids corporate-level double-taxation; a Southern Methodist University study suggests this could provide an additional $3.2 billion to $5.6 billion in capital over the next decade.
• Real Estate Investment Trusts (REITs) could potentially lower capital costs if the IRS clarifies that payments for electricity qualify as rent under Section 856 of the U.S. Internal Revenue Code, as the structure currently requires 75 percent of revenue to come from real estate rent.
• The JOBS Act of 2012 enables crowdfunding for projects under $1 million and increases the annual limit for certain public offering registration exemptions (Regulation A+) from $5 million to $50 million, potentially supporting community-scale solar and wind projects up to 20 megawatts.

APA

Sheridan, B. (2012). New Approaches in Renewable Energy Finance. Environmental and Energy Study Institute. https://www.eesi.org/papers/view/issue-brief-new-approaches-in-renewable-energy-finance

Chicago

Sheridan, Blaise. New Approaches in Renewable Energy Finance. Environmental and Energy Study Institute, 2012. https://www.eesi.org/papers/view/issue-brief-new-approaches-in-renewable-energy-finance.

Wikipedia

{{cite report |last1=Sheridan |first1=Blaise |title=New Approaches in Renewable Energy Finance |publisher=Environmental and Energy Study Institute |date=24 October 2012 |url=https://www.eesi.org/papers/view/issue-brief-new-approaches-in-renewable-energy-finance |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sheridan2012new, author = {Sheridan, Blaise}, title = {{New Approaches in Renewable Energy Finance}}, institution = {Environmental and Energy Study Institute}, year = {2012}, month = oct, url = {https://www.eesi.org/papers/view/issue-brief-new-approaches-in-renewable-energy-finance}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }