After Apache formed the first MLP in 1981, Congress included the tax-exempt structure in that year's Tax Reform Act. That restricted the class of potential MLPs to companies that derive at least 90 percent of their revenue from finding, refining and marketing depletable minerals or natural resources.
Industries have been added since then, including real estate and financial management.
Under a 2008 law, Congress added industrial carbon dioxide, transportation biofuels, alcohol and certain other alternative fuels. All of this has helped wind and solar industry lobbyists make their case for inclusion.
New Capital
"The whole MLP objective is to bring new capital into an industry that otherwise wouldn't attract it," said Soonyong Park, head of global portfolio solutions at investment firm Rogerscasey Inc., which has $315 billion under management. "It's the infrastructure that the MLPs finance, so it's natural to extend that to the wind and solar industry."
Expanding eligibility may mean competition for investors interested in master limited partnerships, Mary Lyman, a spokeswoman for the National Association of Publicly Traded Partnerships, said in an interview.
"We're quite happy to have more MLPs but none of our current members have shown any interest," she said.
Some investors may consider the intermittent nature of wind and solar power as a risky fit for master limited partnerships, according to Chris Eades, portfolio manager for ClearBridge Advisors' Energy MLP Opportunity Fund in New York, which last month raised $540 million.
"When you put up a wind or solar farm, it's hostage to weather for both demand and supply, and it's not a really stable revenue source," Eades said in an interview. "This is a lower- risk way to get equity-like returns, and with oil and gas production rising, we will need new infrastructure."