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SustainableBusiness.com News
Recently, we've reported that institutional investors like pension funds and
corporations are becoming important sources of capital for renewable energy
projects.
Investors are increasingly appreciating the reliable, steady returns they
can get by investing in a solar plant, for example, that's got a signed
contract to sell electricity to a utility for 20 years.
Buffet's energy arm, Midamerican, found that out when its bond offering to
finance a solar plant was wildly over-subscribed.
It turns out, however, that many of these potential investors don't hear
about this opportunity because tax professionals are generally unfamiliar
with the various tax incentives available to private investors in clean
energy projects.
Bloomberg conducted an online survey of subscribers to its BNA Tax and
Accounting Center, and found that although 35% of respondents have made tax
equity investments on behalf of clients in areas such as low-income housing,
the majority weren't aware they could also be made in clean energy.
65% of respondents said they were mostly or completely unfamiliar with
incentives available to investors of US wind projects known as the
Production Tax Credit (PTC).
Only 7% say they're extremely familiar with the PTC, which was used to
finance about 4,000 megawatts (MW) of wind capacity in 2011, or 70% of total
US wind installations, concludes Bloomberg New Energy Finance.
"These results suggest an information disconnect," says Michael
Liebreich, Bloomberg New Energy Finance CEO. "Tax equity investing today
offers backers of clean energy projects, based on proven technologies,
comparatively high risk-adjusted returns, given the current low
interest-rate environment. Apparently though, many in the tax community have
failed so far to spot the opportunity for their clients."
The US Department of Energy (DOE) hosted a meeting recently to inform chief
financial officers and others from Fortune 500 companies about opportunities
available to large corporations in clean energy tax equity investing.
This week the Senate voted down an amendment to the Transportation bill
which would have extended the PTC for another year, instead of letting it
expire at the end of 2012.
The boom and bust cycle for the PTC, approved for several years and then
allowed to expire, has been holding back growth of the US renewable energy
industry.
President Obama includes a permanent renewable energy PTC in his corporate
tax reform plan.
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