For years, green energy industries like wind and solar have been telling Congress that they cannot yet compete with fossil fuels without hefty tax breaks intended especially for them.
But with antipathy for renewable energy subsidies running high among many Republicans, the industries are bringing a new plea to Washington: Allow wind and solar companies to qualify for some of the tax advantages that are used by the oil, gas and real estate industries to raise money from investors.
“We’ve made great progress in bringing down the cost of renewable energy technologies like wind turbines and solar panels,” said Dan Reicher, who is executive director of the Steyer-Taylor Center for Energy Policy and Finance at Stanford and who has been pushing for the changes. “Where we haven’t made the necessary progress is on bringing down the cost of financing the projects that use that equipment, so the cost of renewable energy is higher than it needs to be.”
The industries are looking to two investment structures — the master limited partnership and the real estate investment trust — to help make financing easier and cheaper. Reicher estimated that opening them up to renewable companies could cut the cost of their energy by a third.
The Internal Revenue Service is considering allowing at least one company to form a real estate investment trust, or REIT, for a group of renewable energy projects, with a decision expected soon.
And last month, 31 lawmakers, including Sens. Lisa Murkowski of Alaska and Jerry Moran of Kansas and Rep. Ted Poe of Texas, sent a letter to President Barack Obama urging him to support the changes. All three are Republicans supported by gas and oil interests, according to OpenSecrets.org.
Sen. Chris Coons, D-Del., who was a sponsor of a bill on master limited partnerships, or MLPs, during the last session, said he plans to reintroduce it this year.
“If we can get access to these long-term capital-formation strategies, that will lessen the burden on public finance, on tax credits, on subsidies,” said Dan Adler, managing director of the California Clean Energy Fund. “As these technologies continue to mature, and their costs drop — and the cost of capital drops at the same time — it becomes more purely competitive with the fossil energy industry.”