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Financing Solar Photovoltaic Transitions

From Utility to Residential Market Adoption in Emerging Economies
  • Ranaporn Tantiwechwuttikul
  • Masaru YarimeEmail author
Reference work entry
Part of the Sustainable Development book series (SD)

Abstract

Solar photovoltaic (PV) technological leapfrogging greatly enhances energy accessibility, yet energy affordability remains a critical challenge. Traditional financing options, categorized as the solar-as-asset model, usually favor utility-scale PV projects, whereas the investment growth in smaller-scale PV systems is far behind, particularly in emerging economies. To further untapped PV potential, we need to promote technological adoption in non-utility markets. That requires alternative financing approaches, such as the solar-as-service model. This chapter examines the advantages and disadvantages of different financial schemes for introducing PV facilities in terms of the suitability of funding vehicles and investment mechanisms. Given the government curtailment on subsidies, owing to the gradual PV competitiveness, our analysis particularly focuses on the emerging market for PV installations for self-consumption. As the main obstacle is the high up-front cost of PV systems, we examine the new financial models in which customers buy the service rather than a PV system per se. We consider what conditions would be necessary to facilitate the third-party ownership models and alternative financing schemes. Finally, this chapter discusses what policy measures and instruments can be deployed to foster further PV adoption in the context of emerging economies. This study also provides implications for corporate strategy and financial institutions.

Keywords

PV investment models PV price competitiveness Distributed PV system (DPV) Solar-as-service Solar third-party ownership (TPO) 

JEL Classification

O16 O33 Q48 

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Copyright information

© Asian Development Bank Institute 2019

Authors and Affiliations

  1. 1.Graduate Program in Sustainability Science – Global Leadership Initiative (GPSS-GLI), Graduate School of Frontier SciencesThe University of TokyoTokyoJapan
  2. 2.Division of Public PolicyHong Kong University of Science and TechnologyHong Kong SARChina
  3. 3.Department of Science, Technology, Engineering and Public PolicyUniversity College LondonLondonUK
  4. 4.Graduate School of Public PolicyThe University of TokyoTokyoJapan

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