Funding of DER Projects—Financial Instruments
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As soon as the cash flow plan is prepared, the financing of the project can be considered. Financing a DER requires cost-effective financing of high investment costs. For public entities, the impact of financing instruments on the balance sheet is relevant for decision-making. In recent years, the bank loans and soft loans have been complemented with a number of attractive financing instruments for the public sector. This chapter describes financing instruments and their usefulness for DER projects from the perspective of public administrators and financiers by the following criteria: flexibility, impact on the public debt balance, risk mitigation, cost effectiveness, and options for combining those instruments with other financing tools.
- 1.Report from the European Commission to the European Parliament and Council on alternative tools to external credit ratings….Brussels, October 2016 COM (2016) 664 Final: while public bonds in the international context are sued by a by a sovereign national government, the municipal bonds are issued by local governments to finance public projects such as roads, schools, airports and seaports, and infrastructure-related repairs. The term municipal bond is commonly used in the United States, which has the largest market of such trade-able securities in the world. As of 2011, the municipal bond market was valued at was at $3.7 trillion; UK: the UK municipal bonds agency was set up in 2016 as the first for the sector in the UK. It issues bonds to finance local authority projects at a lower cost than the Debt Management Office. This lowers council’s finance costs, which means more can be invested into local economies, infrastructure and housing projects. The Debt Management Office runs a Public Work Loan Board which is managing to provide loans and to collect the repaymentsGoogle Scholar
- 2.EDLIG, Workpackage B Report (German): Assessment of 16 DER Projects from the Perspective of Finance, Karlsruhe (2014)Google Scholar
- 4.EEFIG Final Report, Brussels (2015)Google Scholar
- 5.IRENA Executive Strategy Workshop: Practical Policies for Financing Renewable Energy Action Plan Investments, Brussels (2015). Currently a 20 years loan interest rate will be between 1.2–2% for a public body and 3.5–4.6% for an ESCo (without forfeiting)Google Scholar
- 6.Einsparcontracting mit Eigenmitteln, Lohse, Karlsruhe (German, 2008)Google Scholar