Project Financing Renewable Energy Projects: Can the Clean Development Mechanism Improve the Bankability of Renewable Energy Projects in Developing Countries?

86 Pages Posted: 27 May 2011  

Nneka Iyabode Eze

University of Dundee - Centre for Energy, Petroleum and Mineral Law & Policy (CEPMLP); Society for Petroleum Engineers (SPE)

Date Written: October 17, 2010

Abstract

Project financing renewable energy projects in developing countries is a daunting task which is further limited by the geo-political, economic and regulatory risk present in the developing countries. Renewable Energy is affected by the intermittent seasonal supply which makes it a high risk activity. But, Renewable energy is the new dispensation in the world’s energy mix. It has the potentials of meeting and surpassing the world’s energy demand, generating a secure and long term sustainable energy supply and reducing local and global GHG emissions.

There is few renewable energy technologies that can compete with conventional fuels in terms of costs even though Renewable Energy offers a solution to the global environmental problems associated with conventional fossil fuels, it is still more expensive.

The major problem associated with development of renewable energy is the fact that it has been difficult raising finance for renewable energy projects mainly due to the risks associated with it. But, can CDM be the answer for renewable energy development in developing countries? Will it encourage the technology transfer that will lead to transfer of skills and knowledge that will result in the sustainable development goal of the Kyoto Protocol for project based mechanisms in developing countries? Furthermore, is it able to give investors the confidence to invest in developing countries?

Keywords: CDM, Project Finance, Kyoto Protocol, Nigeria, Renewable Energy, Developing Countries' Emerging Markets

Suggested Citation

Eze, Nneka Iyabode, Project Financing Renewable Energy Projects: Can the Clean Development Mechanism Improve the Bankability of Renewable Energy Projects in Developing Countries? (October 17, 2010). Available at SSRN: https://ssrn.com/abstract=1851908 or http://dx.doi.org/10.2139/ssrn.1851908

Nneka Iyabode Eze (Contact Author)

University of Dundee - Centre for Energy, Petroleum and Mineral Law & Policy (CEPMLP) ( email )

Nethergate
Dundee, Scotland DD1 4HN
United Kingdom

Society for Petroleum Engineers (SPE)

Dundee, Scotland
United Kingdom

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