Advertisement

What Kinds of Photovoltaic Projects Do Lenders Prefer to Finance?

  • Florian Lüdeke-Freund
  • Moritz Loock
Chapter

Abstract

Discussions of innovation in renewable energy have covered different types of energy production (e.g., Nguyen, Gheewala, & Sagisaka, 2010; Sookkumnerd, Ito, & Kito, 2007; Yusoff, 2006), different industries (e.g., Narodoslawsky, Niederl-Schmidinger, & Halasz, 2008; Smyth, ó Gallachóir, Korres, & Murphy, 2010), or have focused on different geographic regions (e.g., Kaldellis, Simotas, Zafirakis, & Kondili, 2009; Smyth et al., 2010; Sookkumnerd et al., 2007; Zuluaga & Dyner, 2007). However, a crucial aspect has been rarely discussed: financing. Project financing is a central challenge for the diffusion of renewable energies, as it claims a major percentage of overall renewable energy investments (United Nations Environment Programme [UNEP], 2010) and requires huge amounts of debt capital: Debt ratios of 80 percent or even 90 percent are common (Johnson, 2009; Böttcher, 2009; Wuppertal Institute [WI], 2010).

Keywords

Renewable Energy Business Model United Nations Environment Programme International Energy Agency International Energy Agency 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Backhaus, K., Sandrock, O., Schill, J., & Uekermann, H. (Eds.) (1990). Projektfinanzierung—Wirtschaftliche und rechtliche Aspekte einer Finanzierungsmethode für Großprojekte [Project finance—Economic and legal aspects of financing large-scale projects]. Stuttgart, Germany: Poeschel.Google Scholar
  2. Barradale, M. (2010). Impact of public policy uncertainty on renewable energy investment: Wind power and the production tax credit. Energy Policy, 38, 7698–7709.CrossRefGoogle Scholar
  3. Bundesverband Solarwirtschaft (BSW Solar) (German Solar Industry Association) (2010). Statistic data on the German photovoltaic industry. Berlin: BSW-Solar (http://en.solarwirtschaft.de).
  4. Böttcher, J. (2004). Projektfinanzierung [Project finance]. In Deutsche Energie-Agentur (German Energy Agency) (Ed.), Finanzierungs-Know-how—Handbuch für Erneuerbare Energien im Ausland [Financing know-how for renewable energies in foreign countries], (pp. 134–181). Berlin: dena.Google Scholar
  5. Böttcher, J. (2009). Finanzierung von Erneuerbare-Energien-Vorhaben [Financing of renewable energy projects]. Munich: Oldenbourg.CrossRefGoogle Scholar
  6. Chesbrough, H. (2007). Business model innovation: It‘s not just about technology anymore. Strategy & Leadership, 35, 12–17.CrossRefGoogle Scholar
  7. Clark-Murphy, M., & Soutar, G. (2004). What individual investors value: Some Australian evidence. Journal of Economic Psychology, 25, 539–555.CrossRefGoogle Scholar
  8. Deutsche Energie-Agentur (dena) (German Energy Agency) (Ed.) (2004). Finanzierungs-Knowhow— Handbuch für Erneuerbare Energien im Ausland [Financing know-how for renewable energies in foreign countries]. Berlin: dena.Google Scholar
  9. Frantzis, L., Graham, S., Katofsky, R., & Sawyer, H. (2008). Photovoltaic business models. Golden, CO: National Renewable Energy Laboratory.CrossRefGoogle Scholar
  10. Grell, A., & Lang, T. (2008). Photovoltaik Leitfaden für Kreditinstitute—Handbuch zur Prüfung und Finanzierung von Photovoltaikprojekten [A bank guide for assessing and financing photovoltaic projects]. Freiburg im Breisgau, Germany: forseo. (www.forseo.de)
  11. Grosse, P. B. (1990). Projektfinanzierung aus Bankensicht [Project finance from a bank perspective]. In K. Backhaus, O. Sandrock, J. Schill, & H. Uekermann (Eds.), Projektfinanzierung—Wirtschaftliche und rechtliche Aspekte einer Finanzierungsmethode für Großprojekte [Project finance—Economic and legal aspects of financing large-scale projects], (pp. 41–62). Stuttgart, Germany: Poeschel.Google Scholar
  12. Hoffmann, W. (2006). PV solar electricity industry: Market growth and perspective. Solar Energy Materials & Solar Cells, 90, 3285–3311.CrossRefGoogle Scholar
  13. International Energy Agency (IEA) (2011a). Interactions of policies for renewable energy and climate (IEA Working Chapter). Paris: IEA.Google Scholar
  14. International Energy Agency (IEA) (2011b). Technology roadmap—Solar photovoltaic energy. Paris: IEA.Google Scholar
  15. Jäger-Waldau, A. (2009). PV Status report 2009—Research, solar cell production and market implementation of photovoltaics. Luxembourg: European Commission.Google Scholar
  16. Johnson, G. L. (2009). PV sector from an investor’s perspective. Presentation at the 3rd EPIA International Conference on Solar Investments, 7 April 2009, Frankfurt, Germany.Google Scholar
  17. Johnson, R., & Orme, B. (2007). A new approach to Adaptive CBC. Sequim, WA: Sawtooth Software.Google Scholar
  18. Johnson, R., Huber, J., & Bacon, L. (2003). Adaptive Choice Based Conjoint. Sawtooth Software Research Papers. Sequim, WA: Sawtooth Software.Google Scholar
  19. Kahneman, D., & Tversky, A. (1979). Prospect Theory: An analysis of decision under risk. Econometrica, 47, 263–292.CrossRefGoogle Scholar
  20. Kaldellis, J., Simotas, M., Zafirakis, D., & Kondili, E. (2009). Optimum autonomous photovoltaic solution for the Greek Islands on the basis of energy pay-back analysis. Journal of Cleaner Production, 17, 1311–1323.CrossRefGoogle Scholar
  21. Kann, S. (2009). Overcoming barriers to wind project finance in Australia. Energy Policy, 37, 3139–3148.CrossRefGoogle Scholar
  22. Kerzner, H. (2001). Project management—A systems approach to planning, scheduling, and controlling. Hoboken, NJ: Wiley.Google Scholar
  23. Lenardič, D. (2009). Annual review 2008—Large-scale photovoltaic power plants: Annual and cumulative installed power capacity—Key statistical indicators (Free Edition). Jesenice, Slovenia: pvresources.com.Google Scholar
  24. Louviere, J. J., Hensher, D. A., Swait, J. D., & Adamowicz, W. (2003). Stated choice methods analysis and applications. Cambridge: Cambridge University Press.Google Scholar
  25. Masini, A., & Menichetti, E. (in press). The impact of behavioural factors in the renewable energy investment decision making process: Conceptual framework and empirical findings. Energy Policy, from 10.1016/j.enpol.2010.06.062.Google Scholar
  26. Montes, G., & Martín, E. (2007). Profitability of wind energy: Short-term risk factors and possible improvements. Renewable and Sustainable Energy Reviews, 11, 2191–2200.CrossRefGoogle Scholar
  27. Montier, J. (2007). Behavioural finance. Insights into irrational minds and markets. Chichester: Wiley.Google Scholar
  28. Narodoslawsky, M., Niederl-Schmidinger, A., & Halasz, L. (2008). Utilising renewable resources economically: New challenges and chances for process development. Journal of Cleaner Production, 16, 164–170.CrossRefGoogle Scholar
  29. Nausner, P. (2006). Projektmanagement—Die Entwicklung und Produktion des Neuen in Form von Projekten [Project management—Developing and creating the new through projects]. Vienna, Austria: WUV Universitätsverlag.Google Scholar
  30. Nevitt, P. K., & Fabozzi, F. J. (2000). Project financing. London: Euromoney Books.Google Scholar
  31. New Energy Finance (NEF) (2009a). 2008—A year of two halves for clean energy investment: NEF Press Release 14 January 2009. Retrieved April 23, 2010, from http://www.newenergyfinance.com/Download/pressreleases/30/pdffile/.
  32. New Energy Finance (NEF) (2009b). New Energy Finance sees year of consolidation for clean energy in 2009: NEF Press Release 23 January 2009. Retrieved April 23, 2010, from http://www.newenergyfinance.com/Download/pressreleases/31/pdffile/.
  33. New Energy Finance (NEF) (2009c). 44% plunge in investment as crisis catches up with clean energy: NEF Press Release 2 April 2010. Retrieved April 23, 2010, from http://www.newenergyfinance.com/Download/pressreleases/48/pdffile/.
  34. New Energy Finance (NEF) (2009d). Global trends in clean energy investment ( Journalist fact-pack— WEF Meeting: Davos, January 2009): NEF Press Release 2 April 2010. Retrieved April 23, 2010, from http://www.newenergyfinance.com/Download/pressreleases/48/pdffile2/.
  35. New Energy Finance (NEF) (2010a). Clean energy investment down just 6.5% in 2009; Asia outstrips the Americas: NEF Press Release 7 January 2010. Retrieved April 23, 2010, from http://www.newenergyfinance.com/Download/pressreleases/105/pdffile/.
  36. New Energy Finance (NEF) (2010b). Bounce-back in global clean energy investment continues, with first quarter total up 31% year-on-year: NEF Press Release 12 April 2010. Retrieved April 23, 2010, from http://www.newenergyfinance.com/Download/pressreleases/115/pdffile/.
  37. Nguyen, T., Gheewala, S., & Sagisaka, M. (2010). Greenhouse gas savings potential of sugar cane bio-energy systems. Journal of Cleaner Production, 18, 412–418.CrossRefGoogle Scholar
  38. Oschlies, M. K. (2007). A behavioral finance perspective on sustainable energy investment decisions. St. Gallen: University of St. Gallen, Switzerland.Google Scholar
  39. Poullikkas, A. (2010). Technology and market future prospects of photovoltaic systems. International Journal of Energy And Environment, 1, 617–634.Google Scholar
  40. PricewaterhouseCoopers (PwC) (2011). Germany’s photovoltaic industry at the crossroads. Hamburg: PwC.Google Scholar
  41. Reuter, A., & Wecker, Claus (1999). Projektfinanzierung—Anwendungsmöglichkeiten, Risikomanagement, Vertragsgestaltung, bilanzielle Behandlung [Project finance—Application, risk management, contract design, financial treatment]. Schriftenreihe Der Betrieb [Series on The Firm]. Stuttgart, Germany: Schäffer-Poeschel.Google Scholar
  42. Riquelme, H., & Rickards, T. (1992). Hybrid conjoint analysis: An estimation probe in new venture decisions. Journal of Business Venturing, 7, 505–518.CrossRefGoogle Scholar
  43. Sarasin (2009). Solarwirtschaft—Grüne Erholung in Sicht [Solar economy—Green recovery]. Basel: Bank Sarasin.Google Scholar
  44. Schoettl, J. M., & Lehmann-Ortega, L. (2011). Photovoltaic business models: Threat or opportunity for utilities?. In R. Wüstenhagen & R. Wuebker (Eds.), Handbook of research on energy entrepreneurship, (pp. 145–171). Cheltenham: Edward Elgar.Google Scholar
  45. Schwabe, P., Karlynn, C., & Newcomb, J. (2009). Renewable energy project financing: Impacts of the financial crisis and federal legislation. Golden, CO: National Renewable Energy Laboratory.Google Scholar
  46. Shepherd, D., & Zacharakis, A. (1999). Conjoint analysis: A new methodological approach for researching the decision policies of venture capitalists. Venture Capital, 1, 197–217.CrossRefGoogle Scholar
  47. Smyth, B. M., Gallachóir, B. P., Korres, N. E., & Murphy, J. D. (2010). Can we meet targets for biofuels and renewable energy in transport given the constraints imposed by policy in agriculture and energy?. Journal of Cleaner Production, 18, 1671–1685.CrossRefGoogle Scholar
  48. Sookkumnerd, C., Ito, N., & Kito, K. (2007). Feasibility of husk-fuelled steam engines as prime mover of grid-connected generators under the Thai very small renewable energy power producer (VSPP) program. Journal of Cleaner Production, 15, 266–274.CrossRefGoogle Scholar
  49. Train, K. E. (2003). Discrete choice methods with simulation. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  50. Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185, 1124–1131.CrossRefGoogle Scholar
  51. Tversky, A., & Kahneman, D. (1981). The framing of decisions and the psychology of choice. Science, 211, 453–458.CrossRefGoogle Scholar
  52. United Nations Environment Programme (UNEP) (2010). Global trends in sustainable energy investment 2010: Analysis of trends and issues in the financing of renewable energy and energy efficiency. Nairobi: UNEP.Google Scholar
  53. Wuppertal Institute (2010). Potenziell treibende Kräfte und potenzielle Barrieren für den Ausbau erneuerbarer Energien aus Integrativer Sichtweise [Drivers and barriers of renewable energies from an integrative perspective]. Wuppertal: Wuppertal Institute.Google Scholar
  54. Wüstenhagen, R., & Wuebker, R. (Eds.) (2011). Handbook of research on energy entrepreneurship. Cheltenham: Edward Elgar.CrossRefGoogle Scholar
  55. Yusoff, S. (2006). Renewable energy from palm oil: Innovation on effective utilization of waste. Journal of Cleaner Production, 14, 87–93.CrossRefGoogle Scholar
  56. Zott, C., & Amit, R. (2007). Business model design and the performance of entrepreneurial firms. Organization Science, 18, 181–199.CrossRefGoogle Scholar
  57. Zott, C., & Amit, R. (2008). The fit between product market strategy and business model: Implications for firm performance. Strategic Management Journal, 29, 1–26.CrossRefGoogle Scholar
  58. Zuluaga, M., & Dyner, I. (2007). Incentives for renewable energy in reformed Latin-American electricity markets: The Colombian case. Journal of Cleaner Production, 15, 153–162.CrossRefGoogle Scholar

Copyright information

© Alfred Marcus, Paul Shrivastava, Sanjay Sharma, and Stefano Pogutz 2011

Authors and Affiliations

  • Florian Lüdeke-Freund
    • 1
  • Moritz Loock
    • 2
  1. 1.Centre for Sustainability Management (CSM), Leuphana University of LüneburgLüneburgGermany
  2. 2.Institute for Economy and the Environment at the University of St. GallenSt. GallenSwitzerland

Personalised recommendations