Tax Credits, Tax Equity and Alternatives to Spur Clean Energy Financing

The white paper, published by the US Partnership for Renewable Energy Finance, discusses tax equity investments in clean energy development.

The report points out that tax equity financing is constrained by the limited supply of tax equity investors, relative to the demand for clean energy project finance by its high transaction costs, and by barriers tax equity can create additional debt financing.

The report says the 1603 cash grant has proven to be a more efficient, lower cost approach to spur additional private sector investment in renewable energy.

The paper concludes that the continuation of the 1603 cash grant, or a new programme that avoids the limitations of the tax equity market, will continue to make efficient use of capital and promote lower cost development of renewable energy in the domestic market.