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APEC Renewable Energy Financing Workshop

APEC Renewable Energy Financing Workshop. Honolulu 14 May 2004 Barrie Leay. Ambitous RE targets. China Thailand Philippines US Australia New Zealand. Criteria for Financing. Cost of the project Country risk Sector stability Stability of cash flow/customer base

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APEC Renewable Energy Financing Workshop

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  1. APEC Renewable Energy Financing Workshop Honolulu 14 May 2004 Barrie Leay

  2. Ambitous RE targets • China • Thailand • Philippines • US • Australia • New Zealand

  3. Criteria for Financing • Cost of the project • Country risk • Sector stability • Stability of cash flow/customer base • Existence of any take or pay contracts • Project structure including any construction contracts • Project construction time

  4. Hurdles to obtaining financing • High capital to O&M cost ratio • High Development to Investment cost ratio • Small Total Investment Requirements • Difficulty Guaranteeing Cash Flow • Weak Basis for Non-Recourse Financing • Disproportionately high transaction costs • Inaccurate Perception of Risk • Inaccurate pricing of energy production costs

  5. Investment Risks of RE Projects • Credit risk • Construction and development risk • Operating/Commercial risk • Political risk • Financial risk • Force Majeure

  6. Impact of Project Size and Type • On grid • Large energy companies or developers • Financial strength, bank debt, project finance and balance sheet debt • Off grid • Small projects • Bigger financing obstacles • Unpredictable cash flows • More risky for investors and lenders

  7. Development Funds provide many forms of assistance • Seed capital for demonstration projects • Business development grants to SME’s • Lines of credit to local banks • Credit enhancements for risk guarantees • Interest-rate subsidies • SME growth capital funds

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