The interest in renewable energy project finance has increased considerably in
recent times. Numerous private equity firms are taking an interest in putting
their money in renewable energy projects. This demand in energy has enhanced
due to increasing demand for the various giant industries across the world. The
credit crunch and crisis in the financial conditions have led the companies
into cash trapped situations. Thus they require immediate capital investment in
the projects that are met by the private equity sponsor. Many renewable energy funding sources are
interested in funding in more mature projects like solar and wind energy.
The private financing companies mainly finance
those renewable projects that are moving away from conventional fossil fuels.
Solar energy, biomass, geothermal energy, wind, biofuels and other segments
related to energy efficiency and storage falls under the category of
traditional fuels. The investments are mostly characterized by asset-based
capital investments that have very high growth.
Some facts about Financing in the Renewable Energy Projects
Some of the most interesting facts about renewable energy finance areas
follows:
● Apart from private firms, many commercial banks, and pension
funds also invest in renewable energy projects.
● The firms have a pool of equity funds that are produced through
investments by different companies or by individuals with high net value. These
funds are used to provide money to renewable energy projects across the globe.
● The investors can expect to see the return from the projects in
around 3 to 5 years. They calculate their project return via the Internal Rate
of Return (IRR). But it is seen that the actual return is much higher than the
IRR estimated.
● Financial, technical and project-specific, market, policy and
regulatory, security, economic and currency risks should be checked by the
investors before spending their money into the sector.
If you are having some confusion or want a
consultation before investing your money in the renewable energy sector, then
you can hire a professional like Kapok Capital to suggest you the way. Kapok
Capital is a specialist in oil and
gas m&a, fundraising, renewable energy m&a, infrastructure
fundraising, and renewable energy finance. If you want to know more call them
at +44 20 3651 3875 or +44 782 456 2325.
