While Funding for renewable energy project has witnessed a steady growth in the past few decades, rapid growth is significant for the developing nations for fulfilling their goals of sustainable development.
The projects of renewable energy, especially the ones which run in the developing nations face a lot of challenges in terms of policies at the institutional as well as regulatory level, at the project and the market level, etc. This may hamper the maintenance as well as the development of renewable energy sources. Maintenance of renewable energy sources see a lack of transparency in the market, a lack of funding and experience in the development of the project and also a lack of necessary information regarding regulations, availability of resources as well as the market. This also leads to a lack of dependable projects, which makes it difficult for the investors to point out lucrative projects and thereby reducing the capital available for companies which are open to receiving financing options.
Targeting The Project-Level Barriers
For targeting particularly the barriers at the project level, there are certain tools. These tools aim at creating a list of all the projects which are investment mature by actively helping at the early stage of development and fulfilling the gap of Renewable energy finance. They help the developers of the projects in accessing appropriate funds and opportunities for funding.
Limiting the risk of investment
Being a sponsor of the project, a company planning to begin the project, maybe a wind developing company looking to create a wind farm, or an oil firm looking to develop a new resource or transmission firm looking to develop a transmission corridor, etc. A well-established company has its assets, liabilities as well as equity on the balance sheet. It even has an in house team of experts for evaluating the projects and implementing them. Even so, equity holders in such companies wish to keep their risk limited with the Renewable energy project finance just in case if the project does not go as planned.
Lenders Will Give You Money, You Give Them Returns
It is a fact that every project is different from one another and different kind of loans such as bank credit loan, working capital facility, construction loan, etc. may be required, the investors of Energy project finance may be looked at for providing the loan amount, on the condition of receiving returns.
The lenders could even look to get some tax-related benefits from the investment they make.
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