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Sources of Finance, Investment Policies and Plant Entry in the Renewable Energy Sector

Author

Listed:
  • Margarita Kalamova

    (OECD)

  • Christopher Kaminker

    (OECD)

  • Nick Johnstone

    (OECD)

Abstract
This report looks specifically at the full array of public policies promoting investment in the renewable energy sector, and discusses their impact on plant entry into the market, with the support of case studies focusing on Germany, the U.S.A. and Australia. It examines differing risk/return expectations across stages of the investment continuum (from R&D through to mergers and acquisitions) and the financial structures that are employed at each stage. Although transparency, predictability and longevity of government programmes are necessary if investors are to initiate a project in clean energy, predictability should not be mistaken for permanence. In the case where policies target investment in physical capital, it is important to ‘sunset’ many of the policies discussed in this report. It is the nature of entrepreneurship that not all investments in new activities will pay off and not all promotion efforts will be successful. Against such a backdrop, public investment policy will also frequently meet with failure. Combining continuous assessment with policy predictability is a delicate balancing act. Clear criteria for policy evaluation are required, and ideally the criteria for success should depend on productivity. Ce rapport s’intéresse plus particulièrement à l’éventail complet des politiques publiques encourageant l’investissement dans le secteur des énergies renouvelables, et analyse leurs effets sur l’entrée de nouvelles entreprises sur le marché, en s’appuyant sur des études de cas réalisées en Allemagne, aux États-Unis et en Australie. Il étudie les différentes attentes en termes de risque/rendement au cours des différentes phases du processus d’investissement (de la R-D jusqu’aux fusions-acquisitions), et les structures financières correspondantes. Bien que la transparence, la prévisibilité et la longévité des programmes publics soient nécessaires pour que les investisseurs se lancent dans les énergies propres, il ne faut pas confondre prévisibilité et permanence. Quand les politiques publiques ciblent l’investissement dans le capital physique, de nombreuses mesures examinées dans ce rapport doivent être mises de côté. Les entrepreneurs savent pertinemment que la totalité des investissements consacrés à de nouvelles activités, y compris les efforts de promotion, ne sont pas toujours fructueux. Dans ce contexte, les politiques d’investissement public se soldent souvent par un échec. Concilier évaluation continue et prévisibilité des politiques est un exercice d’équilibre délicat, qui doit reposer sur des critères d’évaluation clairement définis, dont le principal devrait idéalement être celui de productivité.

Suggested Citation

  • Margarita Kalamova & Christopher Kaminker & Nick Johnstone, 2011. "Sources of Finance, Investment Policies and Plant Entry in the Renewable Energy Sector," OECD Environment Working Papers 37, OECD Publishing.
    • Handle: RePEc:oec:envaaa:37-en
    DOI: 10.1787/5kg7068011hb-en
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    Citations

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    Cited by:

    1. Patricia Laurens & Christian Bas & Antoine Schoen & Stéphane Lhuillery, 2016. "Technological contribution of MNEs to the growth of energy-greentech sector in the early post-Kyoto period," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 18(2), pages 169-191, April.
    2. Mazzucato, Mariana & Semieniuk, Gregor, 2018. "Financing renewable energy: Who is financing what and why it matters," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 8-22.
    3. Corsatea, Teodora Diana & Giaccaria, Sergio & Arántegui, Roberto Lacal, 2014. "The role of sources of finance on the development of wind technology," Renewable Energy, Elsevier, vol. 66(C), pages 140-149.
    4. Nilgun Serim & Filiz Coban Oran, 2017. "The Renewable Energy Policy Convergence in the European Union: A Comparison on Germany and Turkey s Incentives for the Wind and Solar Energy Resources," International Journal of Energy Economics and Policy, Econjournals, vol. 7(3), pages 308-320.
    5. Antonio Colmenar-Santos & Severo Campíez-Romero & Lorenzo Alfredo Enríquez-Garcia & Clara Pérez-Molina, 2014. "Simplified Analysis of the Electric Power Losses for On-Shore Wind Farms Considering Weibull Distribution Parameters," Energies, MDPI, vol. 7(11), pages 1-30, October.
    6. Bobinaite, Viktorija & Tarvydas, Dalius, 2014. "Financing instruments and channels for the increasing production and consumption of renewable energy: Lithuanian case," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 259-276.
    7. Lam, Patrick T.I. & Law, Angel O.K., 2018. "Financing for renewable energy projects: A decision guide by developmental stages with case studies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 937-944.
    8. Sinsel, Simon R. & Yan, Xuqian & Stephan, Annegret, 2019. "Building resilient renewable power generation portfolios: The impact of diversification on investors’ risk and return," Applied Energy, Elsevier, vol. 254(C).
    9. Kevin Currier, 2015. "Some Implications of Investment Cost Reduction Policies in Energy Markets Employing Green Certificate Systems," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(2), pages 317-323, February.
    10. Shakeel, Shah Rukh & Takala, Josu & Zhu, Lian-Dong, 2017. "Commercialization of renewable energy technologies: A ladder building approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 78(C), pages 855-867.
    11. Mahdieh Rezagholizadeh & Younes Abdi, 2022. "Financial development and development of renewable energy technologies: A comparison of developing and developed countries," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2022(1), pages 95-118.
    12. Shrimali, Gireesh & Nelson, David & Goel, Shobhit & Konda, Charith & Kumar, Raj, 2013. "Renewable deployment in India: Financing costs and implications for policy," Energy Policy, Elsevier, vol. 62(C), pages 28-43.
    13. Colmenar-Santos, Antonio & Campíñez-Romero, Severo & Pérez-Molina, Clara & Mur-Pérez, Francisco, 2015. "Repowering: An actual possibility for wind energy in Spain in a new scenario without feed-in-tariffs," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 319-337.

    More about this item

    Keywords

    asset finance; capital-risque; changement climatique; climate change; environmental policy; financement d'actifs; financial risk; investment policy; politique de l’environnement; politiques d’investissement; renewable energy sources; risque en capital; venture capital; énergies renouvelables;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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