MLPs can help bring in renewable energy investments, study says

A new report released June 5 by the Maguire Energy Institute at Southern Methodist University finds that expanding access to Master Limited Partnerships (MLP) for renewable energy has the potential to allow billions of dollars of untapped investment from Main Street investors to support renewable energy infrastructure. The report was released during the American Wind Energy Association (AWEA)’s WindPower 2012 in Atlanta.

An MLP is a publicly-traded limited partnership in which regular investors can purchase shares in the partnership (called MLP units) just like stock shares. These investments have long been utilized by the oil and gas industry, but renewable projects have been excluded by federal tax law from using them.

The SMU team shows that $5 to $6 billion is currently sidelined by arbitrary restrictions in the tax code, and also details other strengths of an MLP-based policy, including that MLP’s are a good fit for renewable investments because of long-term power purchase agreements that support cash flow stability and the proven track record of MLPs in raising capital for energy infrastructure can be applied to renewable energy, and they are a chance for investors to invest in renewable energy projects and to offer a choice compared to the fossil energy projects that are available in MLPs currently.

To download a copy of the report, click here. (PDF)

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