On June 24th, the Master Limited Partnership (MLP) Parity Act was reintroduced in both the House and Senate. U.S. Senators Chris Coons (D-DE) and Jerry Moran (R-KS), and Representatives Ted Poe (R-TX-02) and Mike Thompson (D-CA-05) put forth this bipartisan legislation to level the playing field by giving investors in renewable energy projects access to a decades-old corporate structure whose tax advantage is currently available only to investors in fossil fuel-based energy projects.
This bill would provide an important modification to the federal tax code that would release private capital by helping additional energy-generation and renewable fuel companies form master limited partnerships, which combine the funding advantages of corporations and the tax advantages of partnerships. Solar energy companies would be among the biggest beneficiaries of this extension.
“Renewable energy technologies have made tremendous progress in the last several decades, and they deserve the same shot at success in the market as traditional energy projects,” Senator Coons said. “By updating the tax code, the bipartisan Master Limited Partnerships Parity Act levels the playing field for all domestic energy sources — renewable and non-renewable – to support the all-of-the-above energy strategy we need to power our country for generations to come. This practical, market-driven solution will unleash private capital and create jobs, and that’s why it has earned broad support from Republicans and Democrats in Congress as well as academics, outside experts, business leaders and investors.”
Private capital is the strongest way to grow solar energy production in the U.S. and such renewable energies should certainly enjoy the same legislative incentives that exist for oil and gas ventures. When taxed at the individual investor level, a solar business with the MLP structure would have more financial flexibility and a lower cost of capital. Today, solar is the fastest-growing source of renewable energy in America and this proposal would go a long way to support this clean, affordable source of energy.
The Congressional calendar remains uncertain entering the fall; however, the MLP Parity Act has broad support from the business community as well as the legislature. The bill was previously introduced in 2013 and hopes have been high since that time that the language may find its way into a comprehensive tax reform effort often cited as a priority of the Senate Finance and House Ways and Means Committees. While comprehensive reform appears stalled for the foreseeable future, smaller energy-focused tax packages (including solar investment tax credit extension) are currently being discussed.
SEMI maintains an advocacy team in Washington, D.C., focused on building support for solar/PV legislation such as the MLP Parity Act. As these initiatives move forward, SEMI will remain a vocal supporter of a level playing field for U.S. solar companies.
September 23, 2015