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Investing in renewable energy in this context of financial crisis


An important issue, a strategy for the world

The attention of public opinion to Renewable Energy Sources, has grown in recent years, and the great importance media have given to the subject, continues to make it appear as particularly new. The phenomenon has roots that date back to the late nineties, precisely in 1997, when the Kyoto Protocol was adopted, the main tool developed by the international community to combat climate change and to reconcile economic and environmental interests.


From the Kyoto Protocol to target for 2020

Ambitious targets imposed on Member states, have led them to adopt national plans to encourage investment in renewable energy sources, allowing the birth of so-called "distributed generation systems". Systems in which energy is no longer produced by one or a few operators, but by a plurality of subjects which receive favourable incentives.


Italy and the banking system in support of RES The renewable energy market is expected to expand rapidly, especially in the fields related to solar, wind and biomass industry also due to the large Italian gap compared to other European countries. The reasons for which the banking system is willing to finance the investment in RES can be attributed to a number of factors: •

A favourable regulatory environment and market. •

• •

Task diversification:

Financing initiatives through the Project Finance

Characteristics of technological fields and quality of cash flows


The renewable energy field

According to the recent technological and market dynamics of energy products, the renewable energy industry is one of the fields characterized by the most interesting development prospects.

Some important and complex aspects in renewable energies are: •

the existence of "alternative" technologies characterized by deep diversity (hydro, photovoltaic / solar thermal, biomass, wind); •

the strong reliance on specific rules.


The economic and financial convenience to invest in different technologies 1. Domestic energy consumption (used in production processes) is more convenient for business than the mere transfer to the network and the market. It is clear that, especially with reference to energy-intensive companies, the Italian energy market prices, can lead to an advantage in the case of self-production, but it should be noted that the results of the simulations indicate an advantage even by a mere production and reselling of energy (with the only exception of the vegetable oils equipment).


The economic and financial convenience to invest in different technologies 2. Technologies show substantial differences in the normal investment return and, above all, in the strong change of these returns in the case of self-consumption and energy transfer to the network.

3. The investment return grows according to its financial structure, which typically requires a specialized banking operator with special instruments (such as the Project Finance). It is necessary to resort to customized solutions, indeed, often, some companies, owners of the plants, are established. They are economically participated by the entrepreneur that limits its exposure to capital, and financed by the banks for the remaining part.


The economic and financial convenience to invest in different technologies 4. Biomass plants are certainly those which, in case of self-consumption, show the best performances, but in certain cases (such as that of biomass deriving from vegetable oils) also show the greatest decreases with an high level of transfer of energy. The range of performance of these technologies is between 29% and 27%. In terms of net present value, with the assumption of a cost of capital around 7.5%, these plants are definitely very important to create economic value. With regard to other sources of renewable energy, both the mini-hydroelectric power and the wind power still show very interesting yields, characterized by a stronger stability, compared to the percentage of self-consumption. Even the NPV of this investment is positive and therefore represents the condition to generate value.


The economic and financial convenience to invest in different technologies 4. Biomass plants are certainly those which, in case of self-consumption, show the best performances, but in certain cases (such as that of biomass deriving from vegetable oils) also show the greatest decreases with an high level of transfer of energy. The range of performance of these technologies is between 29% and 27%. In terms of net present value, with the assumption of a cost of capital around 7.5%, these plants are definitely very important to create economic value. With regard to other sources of renewable energy, both the mini-hydroelectric power that the wind power still show very interesting yields, characterized by a stronger stability, compared to the percentage of self-consumption. Even the NPV of this investment is positive and therefore represents the condition to generate value.


The economic and financial convenience to invest in different technologies

5. Photovoltaic systems show still positive (but more limited) performance levels, considering the importance of the incentive system called "conto energia". They are however, characterized by a strong stability as regards the features previously referred.


Investing in renewable energy in this context of financial crisis

Investing in renewable energy in context of financial crisis  
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