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| − | = The Need for Renewable Energy Finance = | + | == The Need for Renewable Energy Finance == |
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| | '''Finance is essential for renewable energy technology (RET) projects in two ways<ref name="Lindlein, P. & Mostert, W., 2005. Financing Renewable Energies - Instruments, Strategies, Practice Approaches, Frankfurt am Main: KfW.">Lindlein, P. & Mostert, W., 2005. Financing Renewable Energies - Instruments, Strategies, Practice Approaches, Frankfurt am Main: KfW.</ref>:''' | | '''Finance is essential for renewable energy technology (RET) projects in two ways<ref name="Lindlein, P. & Mostert, W., 2005. Financing Renewable Energies - Instruments, Strategies, Practice Approaches, Frankfurt am Main: KfW.">Lindlein, P. & Mostert, W., 2005. Financing Renewable Energies - Instruments, Strategies, Practice Approaches, Frankfurt am Main: KfW.</ref>:''' |
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| | <br/>This profile sets the benchmark for checking to which extent the local financial system with its funds and instruments can match the needs of RE financing<ref name="Lindlein, P. & Mostert, W., 2005. Financing Renewable Energies - Instruments, Strategies, Practice Approaches, Frankfurt am Main: KfW.">Lindlein, P. & Mostert, W., 2005. Financing Renewable Energies - Instruments, Strategies, Practice Approaches, Frankfurt am Main: KfW.</ref>. | | <br/>This profile sets the benchmark for checking to which extent the local financial system with its funds and instruments can match the needs of RE financing<ref name="Lindlein, P. & Mostert, W., 2005. Financing Renewable Energies - Instruments, Strategies, Practice Approaches, Frankfurt am Main: KfW.">Lindlein, P. & Mostert, W., 2005. Financing Renewable Energies - Instruments, Strategies, Practice Approaches, Frankfurt am Main: KfW.</ref>. |
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| − | <pre>'''Energy Market Instruments''' (Feed-in Tariffs, Premium, Renewable obligations, Tenders, Fiscal incentives);</pre><pre>'''Equity Finance Mechanisms''' (Venture Capital, Equity, R&D Grants, Capital/Project Grants, Contingent Grants);</pre><pre>'''Debt Finance Mechanisms''' (Mezzanine Debt, Senior Debt, Guarantees).</pre>
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| − | = Financial Solutions for On-Grid Renewable Energy Projects =
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| − | = Financial Solutions for Off-Grid Renewable Energy Businesses in Developing Countries =
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| − | = Commercial Financial Instruments =
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| − | The commercial private sector offers a wide variety of instruments for financing and risk coverage which potentially could be used for renewable energy technology (RET) finance. Many developing countries do not have a very developed local financial sector and thus currently lack many of the available instruments. However, in a process of globalization this does not mean, that such mechanisms and instruments and funds could not be made available for RE at all. Their contribution to overcome the hurdles of financing of RE projects depend on the willingness to deal with risk and invest funds as well as on the capability to use them for the realization of RE projects. If this would still mean overstrain for the actors in some countries, this may be an ideal case for external assistance to share this burden in order to promote RE<ref name="Lindlein, P. & Mostert, W., 2005. Financing Renewable Energies - Instruments, Strategies, Practice Approaches, Frankfurt am Main: KfW.">Lindlein, P. & Mostert, W., 2005. Financing Renewable Energies - Instruments, Strategies, Practice Approaches, Frankfurt am Main: KfW.</ref>.
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| − | == Equity Finance and Risk Capital ==
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| − | == Debt Financing ==
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| − | == Mezzanine Finance and Subordinated Debt == | + | = Financial Instruments for On-Grid Renewable Energy Projects = |
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| − | == Sales-Lease-Back Arrangements == | + | = Financial Instruments for Off-Grid Renewable Energy Businesses in Developing Countries = |
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There are various types of financing instruments that exist to support the scaling up of renewable energy technologies (RETs). The choice and availability of instruments largely depends on if the project is being undertaken in a developed or developing country, and also on the stage of development of the technologies or projects in question. These can be broadly grouped into those that can be used in addressing financing barriers; those used to address the risks of RET investments; and those that address both simultaneously.[1]
