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The role of financing cost and de-risking strategies for clean energy investment

Jan Steckel () and Michael Jakob ()

International Economics, 2018, issue 155, 19-28

Abstract: Even though costs for renewable energy sources keep falling, the initial investments required for their build-up can pose a substantial challenge in countries with high capital costs. In this paper, we start from the observation that when capital costs are high, carbon pricing alone is unlikely to be sufficient to achieve high shares of renewable energy sources in the power sector. Instead, complementary measures to decrease investors' capital costs are required. We then discuss how financing costs can be lowered by either addressing the underlying sources of investment risk (policy de-risking) or shifting risk away from private sector investors (financial de-risking) on the domestic and the international level.

Keywords: Financing costs; Renewable energy; Carbon pricing; De-risking (search for similar items in EconPapers)
JEL-codes: G32 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2018
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