What regulatory changes would be required for renewable power companies to access financing alternatives such as REITs and MLPs? What are the benefits and the regulatory challenges of each alternative?
The renewable power industry has benefited from years of public subsidies, however, a budget crisis coupled with a turbulent political climate have created uncertainty for continued government support. While recent focus is on the extension of the production tax credit ("PTC"), industry leaders are also anticipating the potential for a complete or partial phase-out of certain State and Federal Incentives and are pushing for alternatives to secure capital.
Much of the discussion to date involves expanding the population of companies qualifying for tax-advantaged business structures already used in the oil and gas and real-estate industries, including MLPs and REITs. MLPs and REITs may offer potential financing alternatives for the renewable energy industry, and we urge companies to consider taking proactive steps to understand the opportunities and potential complexities that may arise with these renewable energy financing alternatives.
This PwC Power and Utilities Alert provides insights on the regulatory changes that would be required to access these alternatives, the benefits, and the challenges of each alternative.