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Renewable Energy Leasing Opportunities

By Laura Ellen Jones and David B. Weisblat
January 29, 2009

With the increased interest and emphasis on renewable and alternative sources of energy at the federal and state level and with increased consumer demand for “green” energy, opportunities abound for investments in renewable and alternative energy sources, including wind, solar, biomass, and geothermal among others. Congress, through the tax code, has encouraged investment in these energy sources. The best known tax incentives are the production tax credit provided with respect to electricity produced from certain renewable sources under Section 45 and the investment tax credit provided under Section 48 for certain energy property, including solar projects.

Lately there has been increased interest in the use of sale-leasebacks as a financing mechanism for solar projects. While most of the activity to date has involved solar projects, there is no reason that sale-leasebacks could not be used to finance other types of renewable energy or other energy projects eligible for investment tax credits under Section 48, such as fuel cells, geothermal or certain combined heat and power facilities, as well as integrated gasification combined cycle and other advanced coal-based generation projects under Section 48A or gasification projects under Section 48B.

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