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ENERGY [R]EVOLUTION A SUSTAINABLE EU 27 ENERGY OUTLOOK

3.2.1overcomingbarrierstofinanceandinvestment forrenewableenergy

3 table3.2: categorisationofbarrierstorenewableenergyinvestment implementingtheenergy[r]evolution | RENEWABLE ENERGY FINANCING BASICS

CATEGORY

SUB-CATEGORY

EXAMPLE BARRIERS

Barriers to finance

Cost barriers

Costs of renewable energy to generate Market failures (e.g. insufficient carbon price) Energy prices Technical barriers Competing technologies (gas, nuclear, CCS and coal)

Insufficient information and experience

Overrated risks Lack of experienced investors Lack of experienced project developers Weak finance sectors in some countries

Financial structure

Up-front investment cost Costs of debt and equity Leverage Risk levels and finance horizon Equity/credit/bond options Security for investment

Project and industry scale

Relative small industry scale Smaller project scale

Investor confidence

Confidence in long term policy Confidence in short term policy Confidence in the renewable energy market

Government renewable energy policy and law

Renewable energy targets Feed-in tariffs Framework law stability Local content rules

System integration and infrastructure

Access to grid Energy infrastructure Overall national infrastructure quality Energy market Contracts between generators and users

Lock-in of existing technologies

Subsidies to other technologies Grid lock-in Skills lock-in Lobbying power

Permitting and planning regulation

Favourability Transparency Public support

Government economic position and policy

Monetary policy e.g. interest rates Fiscal policy e.g. stimulus and austerity Currency risks Tariffs in international trade

Skilled human resources

Lack of training courses

National governance and legal system

Political stability Corruption Robustness of legal system Litigation risks Intellectual property rights Institutional awareness

Other investment barriers

Despite the relatively strong growth in renewable energies in some countries, there are still many barriers which hinder the rapid uptake of renewable energy needed to achieve the scale of development required. The key barriers to renewable energy investment identified by Greenpeace through a literature review23 and interviews with renewable energy sector financiers and developers are shown in Figure 3.4. 36

There are broad categories of common barriers to renewable energy development that are present in many countries, however the nature of the barriers differs significantly. At the local level, political and policy support, grid infrastructure, electricity markets and planning regulations have to be negotiated for new projects.

Energy [R]evolution EU  

A Sustainable EU 27 Energy Outlook

Energy [R]evolution EU  

A Sustainable EU 27 Energy Outlook