Renewable energy has many utilities over non-renewable energy. One, is that supply is abundant from sources. Secondly, it generates energy that creates no greenhouse gas emissions like fossil fuels and hence, air pollution.
The two major types of Renewable energy are Solar and Wind.
Solar Energy: This is the energy evolving from the sun, and it is utilized by using solar collectors. The collected energy is then used to provide electricity. This renewable energy source has its advantages as well as disadvantages.
Pros: The source of this energy, Sunlight is available everywhere. Using it does not create any pollutants or wastes.
Cons: Sunlight can only be stored during the daytime and when it is sunny. The technology used to collect and use solar power is expensive.
Wind Energy: The energy is generated by windmills which use the wind to generate electricity.
Pros: The windmills do not generate any waste or pollutants. Also, it takes very little space for operating.
Cons: Wind is not constant everywhere and can only be utilised in areas where it is windy.
Renewable Energy Project Finance
While funds in this sector have recorded a constant growth over the last few years, it is seen that developing countries are facing multiple challenges in raising fund. These difficulties can be in any form, right from Institutional, regulatory policy level to the project level. The lack of finance becomes a critical factor for these developing countries to meet sustainable climate goals as specified by the Paris Agreement on Global Warming in 2015.
Renewable energy projects suffer from lack of experience in project development, market transparency, inexperience inraising funds, lack of awareness on policy regulations, and resource availability and as such these projects are unable to get the necessary Energy Project finance from Banks and Financial Institutions.
For greenfield projects,infrastructure debt fund is preferred over equity by investors as it is less volatile and gives a steady return along with secured collateral in the form of charge on the asset financed.
On the otherhand, oil and gas finance isreadily available to the already existing oil companies as both the risk and returns are manageable due to massive global appetite despite squeezing margins from lows in oil prices from time to time.
Specific financial organizations are supporting early-stage project development and bridge the funding gap by assisting project developer access appropriate funding opportunities.
