Difference between revisions of "Financial Instruments & Support for Renewable Energy"

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[[Portal:Financing and Funding|► Back to Financing & Funding Portal]]
  
{| style="border-right: medium none; border-top: medium none; margin: auto auto auto 3.5pt; border-left: medium none; width: 17cm; border-bottom: medium none; border-collapse: collapse" cellspacing="0" cellpadding="0" width="643" border="1"
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= Overview =
|- style="height: 8.15pt"
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: windowtext 1pt solid; padding-left: 3.5pt; padding-bottom: 0cm; border-left: windowtext 1pt solid; width: 59.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 8.15pt; background-color: transparent" valign="top" width="79" | <div align="center">'''<span style="font-size: 8pt">Institution</span>'''</div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: windowtext 1pt solid; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 102.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 8.15pt; background-color: transparent" valign="top" width="137" | <div align="center">'''<span style="font-size: 8pt">Länder/Empfänger</span>'''</div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: windowtext 1pt solid; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 114.45pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 8.15pt; background-color: transparent" valign="top" width="153" | <div align="center">'''<span style="font-size: 8pt">Technologien</span>'''</div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: windowtext 1pt solid; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 99.2pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 8.15pt; background-color: transparent" valign="top" width="132" | <div align="center">'''<span style="font-size: 8pt">Unterstützung</span>'''</div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: windowtext 1pt solid; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 106.3pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 8.15pt; background-color: transparent" valign="top" width="142" | <div align="center">'''<span style="font-size: 8pt">ggf. Volumen</span>'''</div>
 
|- style="height: 33pt"
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: windowtext 1pt solid; width: 59.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 33pt; background-color: transparent" valign="top" width="79" | <div align="center"><span style="font-size: 8pt">4E-Fazilität</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 102.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 33pt; background-color: transparent" valign="top" width="137" | <div align="center"><span style="font-size: 8pt">wirtsch. fortgesch. EL</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 114.45pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 33pt; background-color: transparent" valign="top" width="153" | <div align="center"><span style="font-size: 8pt">alle Technologien</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 99.2pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 33pt; background-color: transparent" valign="top" width="132" | <div align="center"><span style="font-size: 8pt">günstiger Kredit</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 106.3pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 33pt; background-color: transparent" valign="top" width="142" | <div align="center"><span style="font-size: 8pt">1 Mrd. Euro;</span></div><div align="center"><span style="font-size: 8pt">Einzelmaßnahmen: 10 - 70 Mio. Euro</span></div>
 
|- style="height: 21.65pt"
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: windowtext 1pt solid; width: 59.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 21.65pt; background-color: transparent" valign="top" width="79" | <div align="center"><span style="font-size: 8pt">EMPower</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 102.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 21.65pt; background-color: transparent" valign="top" width="137" | <div align="center"><span style="font-size: 8pt">Sonnenreiche IL und EL; in Afrika v. a. Nord- und Südafrika</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 114.45pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 21.65pt; background-color: transparent" valign="top" width="153" | <div align="center"><span style="font-size: 8pt">große Photovoltaikanlagen, solarthermischen Kraftwerke</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 99.2pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 21.65pt; background-color: transparent" valign="top" width="132" | <div align="center"><span style="font-size: 8pt">Beratung; Preissenkung durch Nachfragebündelung</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 106.3pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 21.65pt; background-color: transparent" valign="top" width="142" | <div align="center"><span style="font-size: 8pt">Ab (voraussichtl.) 2008: 1,2 Mio. Euro</span></div>
 
|- style="height: 26.25pt"
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: windowtext 1pt solid; width: 59.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 26.25pt; background-color: transparent" valign="top" width="79" | <div align="center"><span style="font-size: 8pt">Energising Africa</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 102.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 26.25pt; background-color: transparent" valign="top" width="137" | <div align="center"><span style="font-size: 8pt">Subsahara-Afrika, u. a. grenzüberschreitende Kooperation</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 114.45pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 26.25pt; background-color: transparent" valign="top" width="153" | <div align="center"><span style="font-size: 8pt">Biomasse­strategien</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 99.2pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 26.25pt; background-color: transparent" valign="top" width="132" | <div align="center"><span style="font-size: 8pt">Sektorvorhaben (Zuschuss)</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 106.3pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 26.25pt; background-color: transparent" valign="top" width="142" | <div align="center"><span style="font-size: 8pt">6,35&nbsp;Mio.&nbsp;Euro</span></div>
 
|- style="height: 32.25pt"
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: windowtext 1pt solid; width: 59.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 32.25pt; background-color: transparent" valign="top" width="79" | <div align="center"><span style="font-size: 8pt">Energising Development</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 102.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 32.25pt; background-color: transparent" valign="top" width="137" | <div align="center"><span style="font-size: 8pt">Subsahara-Afrika;</span></div><div align="center"><span style="font-size: 8pt">Haushalte, kleine Unternehmen u. Einrichtungen</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 114.45pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 32.25pt; background-color: transparent" valign="top" width="153" | <div align="center"><span style="font-size: 8pt">Kochenergie; Beleuchtung; Haushaltsenergie; kleinere produktive Nutzung; E. für soziale Infrastruktur</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 99.2pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 32.25pt; background-color: transparent" valign="top" width="132" | <div align="center"><span style="font-size: 8pt">Zuschuss (Aufstockung laufender TZ-Vorhaben mit NLD-Mitteln)</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 106.3pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 32.25pt; background-color: transparent" valign="top" width="142" | <div align="center"><span style="font-size: 8pt">60 Mio. Euro</span></div>
 
|- style="height: 22.6pt"
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: windowtext 1pt solid; width: 59.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 22.6pt; background-color: transparent" valign="top" width="79" | <div align="center"><span style="font-size: 8pt">TERNA</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 102.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 22.6pt; background-color: transparent" valign="top" width="137" | <div align="center"><span style="font-size: 8pt">EL und Schwellenländer</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 114.45pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 22.6pt; background-color: transparent" valign="top" width="153" | <div align="center"><span style="font-size: 8pt">Windkraft</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 99.2pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 22.6pt; background-color: transparent" valign="top" width="132" | <div align="center"><span style="font-size: 8pt">Zuschuss für Beratung und Planung</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 106.3pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 22.6pt; background-color: transparent" valign="top" width="142" | <div align="center"><span style="font-size: 8pt">5,35 Mio. Euro</span></div>
 
|- style="height: 22.6pt"
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: windowtext 1pt solid; width: 59.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 22.6pt; background-color: transparent" valign="top" width="79" | <div align="center"><span style="font-size: 8pt">GEOTHERM</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 102.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 22.6pt; background-color: transparent" valign="top" width="137" | <div align="center"><span style="font-size: 8pt">EL und SL</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 114.45pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 22.6pt; background-color: transparent" valign="top" width="153" | <div align="center"><span style="font-size: 8pt">Geothermie (Erdwärme)</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 99.2pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 22.6pt; background-color: transparent" valign="top" width="132" | <div align="center"><span style="font-size: 8pt">Beratung, Ausbildung, Risikominimierung, Investorensuche</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 106.3pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 22.6pt; background-color: transparent" valign="top" width="142" | <div align="center"><span style="font-size: 8pt">3,75 Mio. Euro</span></div>
 
|- style="height: 18.05pt"
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: windowtext 1pt solid; width: 59.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 18.05pt; background-color: transparent" valign="top" width="79" | <div align="center"><span style="font-size: 8pt">Exportinitiativen zu RE u. zu EE (BMWi; Mitwirkung deutsche EZ)</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 102.5pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 18.05pt; background-color: transparent" valign="top" width="137" | <div align="center"><span style="font-size: 8pt">Deutsche Unternehmen</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 114.45pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 18.05pt; background-color: transparent" valign="top" width="153" | <div align="center"><span style="font-size: 8pt">Erneuerbare Energie bzw. Energieeffizienz</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 99.2pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 18.05pt; background-color: transparent" valign="top" width="132" | <div align="center"><span style="font-size: 8pt">Informations- und Kontaktvermittlung, Ausstellungsverleih u. ä.</span></div>
 
| style="border-right: windowtext 1pt solid; padding-right: 3.5pt; border-top: #ece9d8; padding-left: 3.5pt; padding-bottom: 0cm; border-left: #ece9d8; width: 106.3pt; padding-top: 0cm; border-bottom: windowtext 1pt solid; height: 18.05pt; background-color: transparent" valign="top" width="142" | <div align="center">&nbsp;</div>
 
|}
 
  
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'''Finance is essential for renewable energy technology (RET) projects in two ways<ref name="Lindlein, P. & Mostert, W., 2005. Financing Renewable Energies - Instruments, Strategies, Practice Approaches, Frankfurt am Main: KfW.">Lindlein, P. & Mostert, W., 2005. Financing Renewable Energies - Instruments, Strategies, Practice Approaches, Frankfurt am Main: KfW.</ref>:'''
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#Without funds projects would not materialize, and
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#With inadequate financing structure and conditions the disadvantage in competitiveness of RET would even increase, as the costs of electric power utilizing renewable energy technologies are highly sensitive to financing terms.
  
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= Financial Instruments =
  
<font color="#002bb8"></font>
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There are various types of financing instruments that exist to support the scaling up of '''renewable energy technologies (<span data-scayt_word="RETs" data-scaytid="3">RETs</span>)'''. The choice and availability of instruments largely depends on if the project is being undertaken in a developed or developing country, and also on the stage of development of the technologies or projects in question. These can be broadly grouped into those that can be used in addressing financing barriers; those used to address the risks of RET investments; and those that address both simultaneously.<ref name="The World Bank, 2013. Financing Renewable Energy - Options for Developing Financing Instruments Using Public Funds. Available at: http://bit.ly/UFHIPy">The World Bank, 2013. Financing Renewable Energy - Options for Developing Financing Instruments Using Public Funds. Available at: http://bit.ly/UFHIPy</ref>
  
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These financial instruments can be distinguished by the level of risk assumed by the the entity funding the instrument concerned, and also by the level of leverage involved. The figure below illustrates this. The financial instruments in the figure are organised on the horizontal axis by their primary focus: whether to address underdeveloped financial markets, the risks and costs of RETs or both. The vertical axis organises the instruments by the level of risk and leverage associated with their use <ref name="The World Bank, 2013. Financing Renewable Energy - Options for Developing Financing Instruments Using Public Funds. Available at: http://bit.ly/UFHIPy">The World Bank, 2013. Financing Renewable Energy - Options for Developing Financing Instruments Using Public Funds. Available at: http://bit.ly/UFHIPy</ref>
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<div title="Page 21" class="page"><div class="layoutArea"><div class="column">
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[[File:RE Financial Instruments.PNG|thumb|center|650px|Source: The World Bank, 2013. Financing Renewable Energy - Options for Developing Financing Instruments Using Public Funds. [Online] Available at: https://www.climateinvestmentfunds.org/cif/sites/climateinvestmentfunds.org/files/SREP_financing_instruments_sk_clean2_FINAL_FOR_PRINTING.pdf|alt=Source: The World Bank, 2013. Financing Renewable Energy - Options for Developing Financing Instruments Using Public Funds. [Online] Available at: https://www.climateinvestmentfunds.org/cif/sites/climateinvestmentfunds.org/files/SREP_financing_instruments_sk_clean2_FINAL_FOR_PRINTING.pdf]]
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</div></div></div>
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<br/>
  
*[http://www.bmu-klimaschutzinitiative.de/ <font color="#002bb8">BMU - Internationale Klimaschutzinitiative (IKI)</font>]
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= On-Grid Renewable Energy Finance =
*[http://www.kfw-entwicklungsbank.de/EN_Home/Sectors/Climate_change/Action_by_KfW_Entwicklungsbank/IKLU.jsp <font color="#002bb8">KfW - IKLU / 4E&nbsp;Faciltiy</font>]
 
  
= European Union =
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On-grid renewables projects face the key issue of how to create a price support mechanism that provides stability and predictability over the medium and long term. This can reduce the risk premium in the cost of capital, which in turn can increase the amount of investment in renewables and lower the price that consumers have to pay for RE. <span style="font-size: 0.85em">For on-grid projects the finance sequence is incomplete, and these gaps can often onl be filled with niche financial products. Some of theses products already exist, while some need to be created. The figure below shows which types of finance are often secured by on-grid projects, which types are occassionaly secured, and the current gaps and barriers in the finance sequence <ref name="Sonntag-O’Brien, V., Basel Agency for Sustainable Energy, Usher, E. & UN Environment Programme, 2004. Mobilising Finance for Renewable Energies - Thematic Background Paper, International Conference for Renewable Energies. Bonn, Renewables 2004.">Sonntag-O’Brien, V., Basel Agency for Sustainable Energy, Usher, E. & UN Environment Programme, 2004. Mobilising Finance for Renewable Energies - Thematic Background Paper, International Conference for Renewable Energies. Bonn, Renewables 2004.</ref>.</span>
  
*[http://ec.europa.eu/europeaid/where/acp/regional-cooperation/energy/index_en.htm <font color="#002bb8">ACP-EU Energy Facility</font>]
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*[http://www.eu-africa-infrastructure-tf.net/ <font color="#002bb8">EU-Africa Infrastructure Trust Fund (ITF)</font>]
 
  
= Multilateral Development Banks =
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Various forms of capital are involved in the financial sequence/'continuum' of grid-connected RETs as shown in the figure below. <u>The conventional power sector financial sequence includes these sources of capital:</u>
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*Equity Finance
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*Debt Finance
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*Corporate or Project Finance
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*Guarantees
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*Insurance<ref name="Sonntag-O’Brien, V., Basel Agency for Sustainable Energy, Usher, E. & UN Environment Programme, 2004. Mobilising Finance for Renewable Energies - Thematic Background Paper, International Conference for Renewable Energies. Bonn, Renewables 2004.">Sonntag-O’Brien, V., Basel Agency for Sustainable Energy, Usher, E. & UN Environment Programme, 2004. Mobilising Finance for Renewable Energies - Thematic Background Paper, International Conference for Renewable Energies. Bonn, Renewables 2004.</ref><span style="line-height: 1.5em; font-size: 0.85em">.</span>
  
*[http://www.thegef.org/gef/home Global Environment Facility (GEF)]&nbsp;
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<br/>
*[http://www.esmap.org/ Energy Sector Management Assistance Programme (ESMAP)]
 
  
[[Category:Financing,_promotion_schemes_and_subsidies]]
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[[File:On-Grid RE Financing.PNG|thumb|center|650px|Source: Sonntag-O’Brien, V., Basel Agency for Sustainable Energy, Usher, E. & UN Environment Programme, 2004. Mobilising Finance for Renewable Energies - Thematic Background Paper, International Conference for Renewable Energies. Bonn, Renewables 2004.]]
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== Equity Finance ==
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<span style="background-color: rgb(255, 255, 255)"></span>[[Equity Finance|► Read about Equity Finance here]]<br/>
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== Debt Finance ==
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<span style="background-color: rgb(255, 255, 255)">[[Debt Finance|► Read about Debt Finance here]]</span>
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<div><div title="Page 36" class="page"><div class="layoutArea"></div></div></div>
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== <span style="font-size: 19.09090805053711px;  line-height: 23.636363983154297px">Project Finance</span> ==
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<span style="background-color: rgb(255, 255, 255)">[[Project Finance|► Read about Project Finance here]]</span>
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== Guarantees ==
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== Insurance ==
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= Off-Grid Renewable Energy Finance =
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[[File:Off-grid RE Financing.PNG|thumb|center|650px|Source: Sonntag-O’Brien, V., Basel Agency for Sustainable Energy, Usher, E. & UN Environment Programme, 2004. Mobilising Finance for Renewable Energies - Thematic Background Paper, International Conference for Renewable Energies. Bonn, Renewables 2004.]]<br/>
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= Results-Based Finance =
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[[Results-Based Financing|► Read about Results-Based Finance here]]<br/>
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= Microfinance =
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[[Microfinance|► Read about Microfinance here]]<br/>
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= Carbon Finance =
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[[Carbon Finance|► Read about Carbon Finance here]]<br/>
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= Further Information =
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*[[Revolving Funds|Revolving Funds]]
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= References =
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[[Category:Financing_and_Funding]]

Latest revision as of 16:02, 22 March 2017

► Back to Financing & Funding Portal

Overview

Finance is essential for renewable energy technology (RET) projects in two ways[1]:

  1. Without funds projects would not materialize, and
  2. With inadequate financing structure and conditions the disadvantage in competitiveness of RET would even increase, as the costs of electric power utilizing renewable energy technologies are highly sensitive to financing terms.


Financial Instruments

There are various types of financing instruments that exist to support the scaling up of renewable energy technologies (RETs). The choice and availability of instruments largely depends on if the project is being undertaken in a developed or developing country, and also on the stage of development of the technologies or projects in question. These can be broadly grouped into those that can be used in addressing financing barriers; those used to address the risks of RET investments; and those that address both simultaneously.[2]

These financial instruments can be distinguished by the level of risk assumed by the the entity funding the instrument concerned, and also by the level of leverage involved. The figure below illustrates this. The financial instruments in the figure are organised on the horizontal axis by their primary focus: whether to address underdeveloped financial markets, the risks and costs of RETs or both. The vertical axis organises the instruments by the level of risk and leverage associated with their use [2]


Source: The World Bank, 2013. Financing Renewable Energy - Options for Developing Financing Instruments Using Public Funds. [Online] Available at: https://www.climateinvestmentfunds.org/cif/sites/climateinvestmentfunds.org/files/SREP_financing_instruments_sk_clean2_FINAL_FOR_PRINTING.pdf
Source: The World Bank, 2013. Financing Renewable Energy - Options for Developing Financing Instruments Using Public Funds. [Online] Available at: https://www.climateinvestmentfunds.org/cif/sites/climateinvestmentfunds.org/files/SREP_financing_instruments_sk_clean2_FINAL_FOR_PRINTING.pdf


On-Grid Renewable Energy Finance

On-grid renewables projects face the key issue of how to create a price support mechanism that provides stability and predictability over the medium and long term. This can reduce the risk premium in the cost of capital, which in turn can increase the amount of investment in renewables and lower the price that consumers have to pay for RE. For on-grid projects the finance sequence is incomplete, and these gaps can often onl be filled with niche financial products. Some of theses products already exist, while some need to be created. The figure below shows which types of finance are often secured by on-grid projects, which types are occassionaly secured, and the current gaps and barriers in the finance sequence [3].


Various forms of capital are involved in the financial sequence/'continuum' of grid-connected RETs as shown in the figure below. The conventional power sector financial sequence includes these sources of capital:

  • Equity Finance
  • Debt Finance
  • Corporate or Project Finance
  • Guarantees
  • Insurance[3].


Source: Sonntag-O’Brien, V., Basel Agency for Sustainable Energy, Usher, E. & UN Environment Programme, 2004. Mobilising Finance for Renewable Energies - Thematic Background Paper, International Conference for Renewable Energies. Bonn, Renewables 2004.



Equity Finance

► Read about Equity Finance here


Debt Finance

► Read about Debt Finance here


Project Finance

► Read about Project Finance here


Guarantees



Insurance



Off-Grid Renewable Energy Finance


Source: Sonntag-O’Brien, V., Basel Agency for Sustainable Energy, Usher, E. & UN Environment Programme, 2004. Mobilising Finance for Renewable Energies - Thematic Background Paper, International Conference for Renewable Energies. Bonn, Renewables 2004.



Results-Based Finance

► Read about Results-Based Finance here


Microfinance

► Read about Microfinance here


Carbon Finance

► Read about Carbon Finance here



Further Information




References

  1. Lindlein, P. & Mostert, W., 2005. Financing Renewable Energies - Instruments, Strategies, Practice Approaches, Frankfurt am Main: KfW.
  2. 2.0 2.1 The World Bank, 2013. Financing Renewable Energy - Options for Developing Financing Instruments Using Public Funds. Available at: http://bit.ly/UFHIPy
  3. 3.0 3.1 Sonntag-O’Brien, V., Basel Agency for Sustainable Energy, Usher, E. & UN Environment Programme, 2004. Mobilising Finance for Renewable Energies - Thematic Background Paper, International Conference for Renewable Energies. Bonn, Renewables 2004.