Finance
Carried Interest is the share of profits that general partners or fund managers receive from an investment fund, typically after investors have received their preferred return. In renewable energy private equity or partnership structures, carried interest represents the general partner's performance-based compensation beyond their management fees. For example, in a solar investment fund, limited partners might receive a 7% preferred return on their capital, and after this threshold is met, the general partner receives a percentage (often 20%) of additional profits as carried interest. This structure aligns the interests of fund managers with investors, incentivizing strong project performance and returns that exceed the preferred return threshold.