 Power purchase agreements with incremental tariffs in local currency: An innovative green finance toolFarhad Taghizadeh-Hesary (), Naoyuki Yoshino (), Ehsan Rasoulinezhad and Cedric Rimaud Global Finance Journal, 2021, vol. 50, issue C Abstract: Investment volume in green projects, specifically in the green electricity market, suffers from limitations such as inadequate long-term financing, various risks, and a low rate of return on investment. Renewable energy power purchase agreements (PPAs), as a direct legal contract between a power provider and a power buyer, are one of the most popular instruments to increase investment. In this study, we model an adjusted PPA in the local currency framework to lower exchange rate risk and incremental tariffs by having the government pay part of the spillover tax revenues to the PPA, leading to a higher return on investment. The major conclusion of this study is that the use of tax revenue through the spillover effect of green electricity supply is a suitable source of financing for PPAs. As one policy implication, we recommend that developing countries allocate 50% of the tax revenue originating from power supply and adopt incremental PPAs to encourage private investment in green projects. Keywords: Green finance; Power purchase agreement; Spillover tax revenue; Renewable energy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:50:y:2021:i:c:s1044028321000648 DOI: 10.1016/j.gfj.2021.100666 Access Statistics for this article Global Finance Journal is currently edited by Manuchehr Shahrokhi More articles in Global Finance Journal from Elsevier |
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