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What Matters for Private Investment Financing in Renewable Energy Globally and in Asia?

Dina Azhgaliyeva, John Beirne and Ranjeeta Mishra
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Dina Azhgaliyeva: Asian Development Bank Institute
Ranjeeta Mishra: Asian Development Bank Institute

No 1246, ADBI Working Papers from Asian Development Bank Institute

Abstract: We examine the drivers of private investment in renewable energy by source of funding for 13 global economies over the period 2008 to 2018, with a focus on a sub-panel of Asian economies. Using a seemingly unrelated regression model, we provide a first quantitative estimate of the effect of government renewable energy policies on private investments across different sources of financing. Our results indicate that feed-in-tariffs (FITs) have the greatest overall effect in Asia on driving private investment in renewable energy, particularly from asset finance compared with other funding sources. The impact of FITs in Asia is also greater than that of the global sample. The impact of FITs is amplified in the presence of lower regulatory quality, which may be related to ease of market entry. We also find an important role in Asia for government expenditure on research and development in stimulating private investment. The magnitudes of the effects in Asia are broadly in line with the overall global sample. Finally, we find that technology costs, are less elastic on private investment in Asia compared with globally in affecting private investment in renewable energy across all funding sources, which may be related to the prevailing strong cost competitiveness of Asian economies in renewable energy provision.

Keywords: private investment; public investment; renewable energy; green investment; feed-in tariff (search for similar items in EconPapers)
JEL-codes: O30 O38 Q28 Q42 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2021-06-20
New Economics Papers: this item is included in nep-ene, nep-env, nep-ppm and nep-sea
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Citations: View citations in EconPapers (3)

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