RE Bankable Project: A Reflection to fund RE

Who wants to back RE projects? What return can these 'backers' get?

Those questions are always thrown in the reciprocal posit whereby RE will never surpass conventional energy loans. In fact, real conditions on the ground suggest so. The price of RE is unattractive compared to any conventional energy. The networking effect attributed to the first mover advantage combined with the massive scale of exploration leads to the preoccupied perspective that conventional energy will prevail in the next decade or even more.

No doubt, RE is always viewed as the last resort for energy sources. The reason is its laggard inception and hesitation from the government. RE policies are put in the second league compared to fossil based energy policies. Consequently, the arrangement of a comprehensive policy that promotes and places RE in the same level of playing field is crippled. Even with the volatility of fossil fuel in the past few years, there have been tendencies to defend conventional energy distributions with fair price through the adoption of better and efficient technology.

The question left is the way to promote RE and get it recognized by funding institutions. The more it is acknowledged (by financiers), the more chance to get cash (for project developers) to fund RE projects. This can only be done with a strong warrant that RE projects will be in the same profitable confident level as conventional energy projects. In other words, strong RE policies must be installed in the first place. Secondly, strong willingness from the government to put RE in the larger portion of the energy mix must be followed by the provision of instruments and incentives which not only is attractive enough for the developers but also convinces financiers and venture capitalist to invest in RE.

But the concretization seems to be far from the expectation. In the United States, even with a strong support from the administration to pave the way of RE, conventional wisdoms of putting the money into the most demanding energy sources (a.k.a. oil and gas) preoccupy financiers' wisdom.

Only with recent developments that RE become bankable. This does not come easy. The financiers must be convinced with a set of complex PPAs in place as well as with one or two institutions willing to back up the project. In some cases, even the ownership of the project is backed by a fortune 100 company. This is the case of 845 MW Sheperd Flat wind farm in Oregon, where GE is part of the owner (Murray, 2010).

So, there will be a lot of home works to do before investing in RE.

References
Murray, T (2010) “The week in Green Energy: The Bankable Project”, [online], Available: http://www.greenenergyreporter.com/features/the-week-in-green-energy/week-green-energy-bankable-project/ [November 19, 2010]