Back to OurEnergyLibrary search




The S-REIT: An Investment-Driven Solution to Solar Development Problems

The S-REIT: An Investment-Driven Solution to Solar Development Problems

Full Title:  The S-REIT: An Investment-Driven Solution to Solar Development Problems
Author(s):  Joshua L. Sturtevant
Publisher(s):  GW Solar Institute
Publication Date: May 1, 2012
Full Text: Download Resource
Description (excerpt):

Notwithstanding the substantial benefits of solar power, this renewable energy source remains underdeveloped, and effective financial incentive policies are not currently in place to support the development of large‐scale solar facilities over the long‐term. However, there is room for innovative ideas and structures to stimulate the pace and breadth of solar energy development. One potential approach that would further this goal is to extend a tax structure, which already exists and benefits the commercial real estate market, to stimulate large‐scale solar energy development. Just as real estate investment trusts (REITs) have spurred investment into commercial real estate, solar real estate investment trusts (S‐REITs) could bring solar development to the masses and would increase capital flows into solar energy markets. The REIT concept is particularly applicable to solar photovoltaics (PV) because of the nature of this technology, particularly its dependable output independent of most market risks (e.g, fuel price increases and risks related to new green house gas regulation) and its long useful life.

However, the existing tax code must be clarified in order to make this vision of a solar investment a reality. Specifically, confirmation that proceeds from power purchase agreements qualify as revenue as defined by § 856 of the Internal Revenue Code is needed. Such a clarification could be achieved by securing a favorable revenue ruling or private letter ruling from the Internal Revenue Service. Alternatively, Congress could enact legislation amending the Internal Revenue Code to achieve this objective. The immediate effectiveness of the REIT structure in the solar energy context also would require the restructuring of some of the current financial incentives for large‐scale solar projects.

All statements and/or propositions in discussion prompts are meant exclusively to stimulate discussion and do not represent the views of OurEnergyPolicy.org, its Partners, Topic Directors or Experts, nor of any individual or organization. Comments by and opinions of Expert participants are their own.

Sign up for our Press Release Distribution List

    Your Name (required)

    Your Email (required)

    Please sign me up to receive press releases from OurEnergyPolicy.org.