Financing investments in renewable energy: The role of policy design and restructuring
- Lawrence Berkeley National Lab., CA (United States). Environmental Energy Technologies Div.
The costs of electric power projects utilizing renewable energy technologies are highly sensitive to financing terms. Consequently, as the electricity industry is restructured and new renewables policies are created, it is important for policymakers to consider the impacts of renewables policy design on project financing. This report describes the power plant financing process and provides insights to policymakers on the important nexus between renewables policy design and finance. A cash-flow model is used to estimate the impact of various financing variables on renewable energy costs. Past and current renewable energy policies are then evaluated to demonstrate the influence of policy design on the financing process and on financing costs. The possible impacts of electricity restructuring on power plant financing are discussed and key design issues are identified for three specific renewable energy programs being considered in the restructuring process: (1) surcharge-funded policies; (2) renewables portfolio standards; and (3) green marketing programs. Finally, several policies that are intended to directly reduce financing costs and barriers are analyzed. The authors find that one of the key reasons that renewables policies are not more effective is that project development and financing processes are frequently ignored or misunderstood when designing and implementing renewable energy incentives. A policy that is carefully designed can reduce renewable energy costs dramatically by providing revenue certainty that will, in turn, reduce financing risk premiums.
- Research Organization:
- Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
- Sponsoring Organization:
- USDOE Assistant Secretary for Energy Efficiency and Renewable Energy, Washington, DC (United States)
- DOE Contract Number:
- AC03-76SF00098
- OSTI ID:
- 459384
- Report Number(s):
- LBNL-39826; ON: DE97004505; TRN: AHC29708%%49
- Resource Relation:
- Other Information: PBD: Mar 1997
- Country of Publication:
- United States
- Language:
- English
Similar Records
Windpower project ownership and financing: The cost impacts of alternative development structures
Designing renewable energy policies within California`s electricity restructuring process