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Ways to make renewable energy competitive in USA

Two financial mechanisms that have driven investment in traditional energy projects — real estate investment trusts and master limited partnerships — could, with some help from Washington, be extended to renewable energy projects to lower their cost and make America’s energy future cleaner, cheaper — and more democratic

How to Make Renewable Energy Competitive, NYT By FELIX MORMANN and DAN REICHER June 1, 2012 STANFORD, Calif.Renewable energy needs help. Technological innovation has significantly reduced the cost of solar panels, wind turbines and other equipment, but renewable energy still needs serious subsidies to compete with conventional energy. Today, help comes mostly in the form of federal tax breaks.

These tax incentives, and the Congressional battle over extending them for wind projects beyond the end of this year, mean that other, more powerful policies to promote renewables are not getting the attention they deserve. If renewable energy is going to become fully competitive and a significant source of energy in the United States, then further technological innovation must be accompanied by financial innovation so that clean energy sources gain access to the same low-cost capital that traditional energy sources like coal and natural gas enjoy.

Two financial mechanisms that have driven investment in traditional energy projects — real estate investment trusts and master limited partnerships — could, with some help from Washington, be extended to renewable energy projects to lower their cost and make America’s energy future cleaner, cheaper — and more democratic……..
Real estate investment trusts, or REITs, which are traded publicly
like stocks, could tap far broader pools of capital to vastly lower
the cost of financing renewable energy. REITs have a market
capitalization of over $440 billion while paying shareholders average
dividends below 10 percent — roughly a third of the cost of tax equity
investments for renewable energy.

Master limited partnerships carry the fund-raising advantages of a
corporation: ownership interests are publicly traded and offer
investors the liquidity, limited liability and dividends of classic
corporations. Their market capitalization exceeds $350 billion. With
average dividends of just 6 percent, these investment vehicles could
substantially reduce the cost of financing renewables.

But current law makes using both of these investment vehicles for
renewable energy difficult if not impossible. …..
http://www.nytimes.com/2012/06/02/opinion/how-to-make-renewable-energy-competitive.html

June 4, 2012 - Posted by Christina Macpherson | renewable, USA