Master Limited Partnerships and Real Estate Investment Trusts: Opportunities and Potential Complications for Renewable Energy

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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, ... continued below

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36 p.

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Feldman, D. & Settle, E. November 1, 2013.

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Description

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.

Physical Description

36 p.

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  • Report No.: NREL/TP-6A20-60413
  • Grant Number: AC36-08GO28308
  • DOI: 10.2172/1110461 | External Link
  • Office of Scientific & Technical Information Report Number: 1110461
  • Archival Resource Key: ark:/67531/metadc872433

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Office of Scientific & Technical Information Technical Reports

Reports, articles and other documents harvested from the Office of Scientific and Technical Information.

Office of Scientific and Technical Information (OSTI) is the Department of Energy (DOE) office that collects, preserves, and disseminates DOE-sponsored research and development (R&D) results that are the outcomes of R&D projects or other funded activities at DOE labs and facilities nationwide and grantees at universities and other institutions.

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Creation Date

  • November 1, 2013

Added to The UNT Digital Library

  • Sept. 16, 2016, 12:32 a.m.

Description Last Updated

  • April 5, 2017, 6:38 p.m.

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Feldman, D. & Settle, E. Master Limited Partnerships and Real Estate Investment Trusts: Opportunities and Potential Complications for Renewable Energy, report, November 1, 2013; Golden, Colorado. (digital.library.unt.edu/ark:/67531/metadc872433/: accessed December 12, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.