Click here to subscribe to
Planet-Profit Report, reporting on sustainable development in the Western United States.

U.S. renewable energy needs new investors and finance models to stay on track

The private sector needs to step up

By Bloomberg New Energy Finance

With electricity demand weak and stimulus funds dwindling, the U.S. renewable energy sector must attract new investors and make use of unique tax-based financing structures in the next 18 months or risk a sharp drop in new project builds, according to new research by specialist research firm Bloomberg New Energy Finance commissioned by Reznick Group.

The clean energy industry has been a major beneficiary of public support from the American Recovery and Reinvestment Act in the form of over $65 billion in tax credits, grants, and soft loans. But nearly all of those stimulus funds have now been deployed. Unless the private sector steps into the breach with substantial new investment, project development will slow.

Bloomberg New Energy Finance, a research firm specializing in clean energy, water, power, and carbon markets, has worked with Reznick Group, a national accounting, tax, and business advisory firm, to explore where the US renewable energy financing market stands today and where it may go from this critical juncture. It also explains how tax-based financing structures work and appraises their economics. The resulting report, “The return – and returns – of tax equity for US renewable projects”, can be downloaded at http://www.bnef.com/WhitePapers/download/54 .

With a cash-based incentive which was part of the US stimulus program due to expire at the end of 2011, tax credits are likely to again become the most important federal subsidies supporting renewable project development in the US. 

Read the rest of the story.