Content area
Full Text
Real estate investment trusts may provide a feasible option for overcoming the legacy of "balkanized ownership and ineffective regulatory structure" that are hindering an expansion of the U.S. transmission grid needed to accommodate increasing amounts of electricity from renewable energy sources, a report released Aug. 31 by Duke University suggested.
One way Congress could remove barriers to investment in new transmission lines would be to modify certain REIT tax provisions to enable electric transmission REITs, according to the report, "Electrical Transmission: Barriers and Policy Solutions."
Because transmission assets generate high returns with very low risk, they may attract significant investment interest if they are made available to broader groups of investors, said Chi-Jen Yang, a technology policy analyst with the Climate Change Policy Partnership based at Duke University and lead author of the report. "REITs provide an opportunity to attract a broader investor group to electric transmission projects and further the vertical disintegration between transmission and generation."
Yang argued that investor-owned utilities may be willing to divest their transmission assets "by restructuring them as REITs for liquidity and lower taxes. When a state-regulated vertically integrated utility restructures its transmission assets as an REIT, it would effectively transfer the...