How to Enable Renewable Wind Energy Financing in Central and Eastern Europe
WEC Central & Eastern Europe Regional Energy Forum – FOREN 2016, 12-16 June 2016, Vox Maris Grand Resort, Costinesti, Romania
11 Pages Posted: 18 Apr 2017
Date Written: June 16, 2016
Moving towards a low carbon economy will provide safe and sustainable energy for Central and Eastern Europe. This paper discusses the current renewable landscape in CEE EU member countries, with particular analysis on wind energy. The focus here is especially from an economic perspective and provides recommendations for the design of renewable policies and finance strategy using country / project examples for context and illustration throughout.
Renewable progress reports in the EU show that the overall figures mask national differences between North Western, Southern and CEE countries. The primary answer to what explains the difference between member states is policy.
Renewables are capital-intensive projects and so the cost of capital – the fee that investors ask for making capital available – is a decisive factor for their realisation. It will be higher the more risky the project is seen, so that the purpose of renewables policies is to reduce risk and therefore the cost of capital, to make it more likely that projects get built.
The energy transition in Europe has been possible in part because of very low costs for capital. National variation reflects the relative effectiveness of policy and regulatory frameworks and uncertainty over future energy policy in EU member states. Most countries saw new installations fall to zero as a result of inadequate policies which shows investors need a secure political framework.
Stable regulatory frameworks and visibility therefore remain imperative to provide investors with certainty and growing wind power in CEE and other parts of Europe.
Keywords: renewable energy (RE), cost of capital, investment risks, support schemes
JEL Classification: A19, A29, B311, C59, C99, D29, D59, D89, D99, I39, J29, Q49, Z00, Z10
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