Why Renewable Energy is an attractive investment

epgThe European Generation Strategy Summit & Power Project Financing and New Technologies Forum took place in Vienna on 27-29 November 2013, attracting high-end players from the European energy market and politics. The European Sting, a keen follower of Energy Affairs at the Old Continent, was there to contribute to the dialogue and report on the event. The participants discussed the evolution of the EU energy strategy and possible future challenges before it, raising issues of reshaping the traditional energy industries with smart integration of renewable energy sources (RES) into the energy system.

Market Directions

Over the last two decades the structure of the European energy market has dramatically changed, as principles of sustainability, economic efficiency and energy security became widely embraced by society. Today all European states demonstrate a willingness to adhere to these principles and most of them show a readiness to promote sustainable development through the use of alternative energy sources. For instance, in Norway almost all electricity is generated by water sources. And Latvia, hugely dependent on Russian oil and gas in the past, is now meeting national demands for electricity by using hydro energy (54% of overall electricity supply) and biomass (3% of overall electricity supply). Other countries are actively developing solar and wind farms, with Spain being the absolute leader in this segment of the RES market.

However, not all participants were optimistic about the RES revolution in the European energy sector. Opponents pointed out that renewables disturb the balance of the energy system, are costly to produce and too expensive to consume and are not worth to be supported and developed in the future.

On the other hand the impact of the global environmental crisis has become impossible to ignore, calling the international community to find solutions fast. Andre Jurres, CEO, NPG Energy, in his “Future of Energy” speech emphasized that with a constantly growing population, energy consumption will only continue to rise, making international environmental goals a mere ambition, impossible to achieve.

NPG Energy sees the use of alternative energy resources as a path to sustainability and the only way into the future. However, at the moment progress along this path is rather slow and requires large financial contributions and constant investment.

In view of the importance of finance for anything to move forward a special day was dedicated to Energy Project Finance during the conference. This article analyzes the outcomes of the special financing day, discussing the key trends, structures and methods for finding investments to implement alternative energy projects.

Financing Baseload and Renewable Energy Projects

The financial panel of the Forum included UniCredit Bank, EnerCap Capital Partner, European Investment and Partners, Deutsche Asset & Wealth Management International GmbH. The key players on the financial market showed interest in the development of renewable energy projects. Energy sector experts discussed deals that equity investors are seeking and the terms they are ready to offer.

Daniel Kockisch, UniCredit Bank Austria Project and Commodity Finance Director, spoke about financial structures and the requirements of financial institutions for energy projects. Marta Navarrete, Former EU Commission Program Manager explained how to deal with the financial needs for infrastructure development and transitions. Jim Campion, EnerCap Capital Partner, addressed the audience on how to engage institutional investors for financing renewable energy projects. The panel was followed by numerous questions and a fruitful discussion.

Potential Investment for Renewable Energy Projects

Renewable energy projects are recognized as socially beneficial are often stimulated and supported by government through energy market instruments such as feed-in tariffs, premium, renewable obligations, tenders, fiscal incentives. This support makes renewables an attractive product for private equity funds, equity, capital/project grants.

Apart from venture capital, traditional banks also have an interest, introducing special programs to offer debt finance mechanisms, mezzanine debt, senior debt, and guarantees.

Similarly, international financial institutions, such as EBRD, IFC, European Investment Bank (EIB) are participants of the energy market. For instance the EBRD has introduced alternative energy programmes in Armenia, Georgia, Russia, Ukraine, Bulgaria and Estonia.

Governmental grants and export agency guarantees are another way for securing finance in this sphere.

Barriers to finance RES

With all that said, it is necessary to admit that RES projects are controversial. First of all they are risky, i.e. investors have a wide range of risks to consider, starting with country risks, such as change of government policy to technological, administrative procedures. Second, the subsidies granted to alternative energy projects are under a great deal of political influence and, thus, depend on how long the government can afford to subsidize and invest in innovations.

Stabilizing Policies, Rules and Regulations

These risks may be overcome by providing a stable legal system and guarantees to investors that conditions would not change in future. According to Dr Bjorn Peters, representative of Deutsche Asset & Wealth Management International GmbH, investors seek stability through understanding of the future. Even ‘what if’ scenarios and trends are taken into account by investors when considering a deal.  RES regulation should be predictable and based on a concrete set of rules that is not likely to change or be politically affected.

Conclusions

According to the World Economic Forum, energy production remains the main contributor to global warming. Therefore sustainability is critical to the overall energy architecture. In this path local government plays a key role in this process as it can mitigate risks and provide guarantees for investors. Moreover, energy sector to develop need more scientific innovation to make RES more market efficient.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

The EU approves a new package of budget assistance to the Republic of Moldova to support rule of law and rural development reforms

Greece did it again

Coronavirus: Commission unveils EU vaccines strategy

South Sudan’s women caught up in ‘futile man’s war’ UN gender equality chief

Border management: EU signs agreement with Montenegro on European Border and Coast Guard cooperation

How personalized care can tackle the late-life loneliness epidemic

Has Germany rebuffed ECB on the banking union?

Will Boris Johnson’s victory lead to a no-deal Brexit or is there still time?

The Role of Medical Students in Sex Education

ECB: Reaching the limits of its mandate to revive the Eurozone economy

A new world that demands new doctors in the fourth industrial revolution

Protection of transported animals: Parliament establishes inquiry committee

Vaccination campaigns are wars against fake news

EU steps up economic partnership with Kenya to boost job creation

Medical students, climate change and health: an unorthodox combination

Iceland’s slowdown underlines the need to fix structural issues

Here’s how the WTO can help address plastic pollution

Rohingya crisis: EU strengthens humanitarian support with €10 million

EU Parliament raises burning issues over the FTA with the US

Here’s how India became a global clean energy powerhouse

Public climate finance to developing countries is rising

EU to relocate 40,000 migrants across the bloc: first step of a long due substantial reform?

What does artificial intelligence do in medicine?

Shaping the Conference on the Future of Europe

Will we join hands for a tomorrow without antimicrobial resistance?

Germany tries to save Europe from war between Ukraine and Russia

EU-China Leaders’ meeting: Delivering results by standing firm on EU interests and values

One million facing food shortages, nutrition crisis after Mozambique cyclones: UNICEF

Climate finance for developing countries reached USD 71 billion in 2017

Pandemics are here to stay. Here’s how to prepare for the next one

3 things to know about women in STEM

The Mental Health Hero in You

Mobile 360 Africa 11-13 July 2017

Remarks by President Juncker at the joint press conference with President Tusk ahead of the G20 Summit

If the Current Situation in Hong Kong Arose in the West

Explained, the economic ties between Europe and Asia

How many more financial crises in the West can the world stand?

Foreign fighters: ‘One of the most serious dimensions’ in global counter-terrorism struggle

Millennials (and Gen X) – Here are the steps you should take to secure your financial future

First do no harm. Why healthcare needs to change

Why climate change matters for future health professionals

Solutions for cultural understanding: medical students’ perspective

Third EU-Western Balkans Media Days: EU reaffirms comprehensive support to media freedom in the region

COP21 Paris agreement: a non legally-binding climate pact won’t stop effectively global warming while EU’s Cañete throws hardest part to next Commission

COVID-19: Commission launches European team of scientific experts to strengthen EU coordination and medical response

At last Britain considers a super-soft Brexit

EU Budget 2020 conciliation talks suspended

What business leaders can learn from jazz

Reading the smoke signals: The long-term consequences of Amazon wildfire on global health

Greta Thunberg tells world leaders ‘you are failing us’, as nations announce fresh climate action

The West and Russia accomplished the dismembering and the economic destruction of Ukraine

LGBTQI+ and medicine

Our food system is no longer fit for the 21st century. Here are three ways to fix it

European Solidarity Corps: three years on

‘Virtual Biopsy’ device detects skin tumours in 15 minutes

Living to 100: why we should plan for more sushi, chocolate and work

UN, African Union make significant joint commitment to global health

Eurozone: Austerity brings new political tremors

Human Rights and Democracy: striving for dignity and equality around the world

Somalia: UN Security Council condemns terrorist attack in which dozens were killed or injured

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s