Determinants of Project Finance success for renewable energy

Julián Benavides-Franco, Juan M. Gómez and Miguel A. Pérez-Uribe

Renewable Energy, 2023, vol. 211, issue C, 188-201

Abstract: World electricity consumption has grown permanently since 1990, dramatically increasing the emission of greenhouse gases. The worldwide efforts to reduce them and address climate change are leading to the massive electrification of different end-users, increasing the power demand. Therefore, achieving Sustainable Development Goals regarding affordable and clean energy requires the extensive availability of capital investments in electricity generation from renewable sources. Project Finance (PF) is a suitable financing alternative for large projects. This paper presents the advantages of PF contracts in allocating risks to appropriate counterparts and reducing the likelihood of default. Additionally, this study analyzes the characteristics that favor PF financing for renewable energy projects. The results reveal that country's governance levels, well-developed financial systems, and project costs affect the financing probability of a PF initiative, particularly for low and middle-income countries. Therefore, public policies aimed at increasing the availability of resources to renewable projects must tackle these factors.

Keywords: Project finance; Renewable energy; Sustainable development goals; Governance levels; Financial systems (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:renene:v:211:y:2023:i:c:p:188-201

DOI: 10.1016/j.renene.2023.04.031

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