Financing renewable energy projects in emerging economies: The expansion of Pelletics

On the 15th of August 2011, in San José, Costa Rica, Alfredo Vargas and Ricardo de Matheu, managers of the CAREC Investment Fund, meet to make their final recommendation on whether or not to fund the expansion of a pellet production project in Costa Rica. A few months earlier, the developers of the project, Juan Sauma and Jorre Valaert, invite Ricardo and Alfredo to visit their pellet production plant already in operation. After the visit, the CAREC fund managers receive a formal request from the developers to invest US$1.35 million in the project's expansion and refocus. Alfredo and Ricardo need to decide whether funding the project at this juncture is a good opportunity for CAREC and if so, under what conditions.