Managing Credit Risk and Improving Access to Finance in Green Energy Projects

Purkayastha Dhruba ()

Working Papers from eSocialSciences

Abstract: The cost of finance has a relatively high impact on the returns and viability of clean energy projects compared with fossil fuel-based energy projects, because the operating costs for renewable energy projects are very low. Credit risk assessment and ratings, which have usually been an inappropriate measure of credit risk for clean energy finance, have a significant influence on the cost of finance. Factors like inadequate credit information, a lack of historical data at the project level, and the higher risk of technological obsolescence lead to credit market failure in clean energy finance, leading to mispricing of risk and poor capital allocation to clean energy infrastructure in the economy. Access to institutional finance is more constrained in the distributed renewable energy sector, as the transaction costs are high, consumer credit risk is high or unknown, and a variety of other challenges exist. It is important to ease these constraints, through appropriate policy and financing interventions to crowd in domestic banks, by improving the quality of credit information, both technical and commercial, creating suitable financial intermediaries, and providing risk mitigation solutions

Keywords: eSS; corporate finance; financial risk; financing; ratings and rating agencies; renewable energy; finance; clean energy project; fuel-based energy projects; operating costs; Credit risk assessment; clean energy finance; credit information; historical data; technological obsolescence; renewable energy sector. (search for similar items in EconPapers)
Date: 2018-08
Note: Institutional Papers
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.esocialsciences.org/Download/repecDownl ... AId=12890&fref=repec
Our link check indicates that this URL is bad, the error code is: 503 Service Unavailable

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ess:wpaper:id:12890

Access Statistics for this paper

More papers in Working Papers from eSocialSciences
Bibliographic data for series maintained by Padma Prakash ().