Renewable EnergyPlenty of Americans imagine the only reason that they aren’t getting their power from sunlight and wind is because these technologies are simply too expensive and can’t compete with the booming gas market or established coal plants.

To some extent that’s still true, but more and more The New York Times reports that one of the biggest hindrances is not the cost of the solar panels or turbines, but the cost of actually finding financing for the project.

The federal government, along with several states, has tried to encourage renewables by offering major tax credits for these projects.

The problem is, however, that companies only pay taxes on they money they’re making. With margins so tight in the highly competitive renewable energy industry, not many developments can actually take advantage of the tax credits, forcing companies to find partners willing to invest sometimes billions of dollars in return for future tax benefits.

Since not many companies want to buy tax credits on this scale, often developers need to offer extremely high returns just to attract investors.

The Times notes that some green energy business advocates are pushing for regulators to open up some different types of financing as a way to encourage more investment.

In particular, many are asking that renewable projects be allowed to use two arrangements common in other industries – real estate investment trusts (REITs) and master limited partnerships (MLPs). Both are ways of investing in developments without getting taxed more than necessary in the process.

MlPs in particular are common in the oil and gas industry, where they are a popular way of raising funds for infrastructure projects like pipelines. REITs are a slightly less complicated arrangement that have been used to develop everything from cellphone towers to power transmission projects, though they would not be eligible for the popular tax credits.

In both cases, these kinds of financing could create securities that could be traded just like any stock. That means that any business, or even individual, that wants to take a stake in a promising renewable energy project could find a way to invest much more easily, without needing to have billions in profits to apply tax credits toward.

A report from the U.S. Department of Energy’s National Renewable Energy Laboratory found that the traditional forms of renewable energy financing were starting to dry up in the wake of the recession. The situation has improved since then, but there are still far too few options for smaller businesses to invest in the industry when and how they want.

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