chapter  11
20 Pages

Business: Finance

Even for projects in which capital is available, it may be at rates or yield requirements that are burdensome to project economics. Financing costs can significantly raise the final cost of power. In Figure 11.1, the financial carrying costs – including the equity and debt component s – can be larger than the recovery of initial capital expenditures (i.e., depreciation). In this chapter we will define the basics of project finance for renewable energy projects. We will also give specific emphasis to financing mechanisms used in the market at present as well as highlight potential areas for improvement in renewable energy finance.