Article ID Journal Published Year Pages File Type
6767949 Renewable Energy 2015 9 Pages PDF
Abstract
Although many incentive schemes and renewable energy policies, such as feed-in tariffs and tax credits, have been imposed to boost renewable energy investment, renewable energy investment still necessitates huge initial capital costs and involves numerous uncertainties. Unless the problems are well addressed, renewable energy developments are hindered. In this paper, we present a new financing instrument, called hybrid bond, to build renewable energy projects. The hybrid bond consists of a portfolio of renewable energy projects. It does not only financially support the initial capital costs, but also manages the risks associated with renewable energy investment. Key risks including market risks, credit risks, liquidity risks, operational risks and political risks are identified and managed. In the proposed framework, it reveals that the sale of a hybrid bond can finance a substantial share of upfront capital costs of renewable energy projects and the use of hybrid bond is able to manage major uncertainties.
Related Topics
Physical Sciences and Engineering Energy Renewable Energy, Sustainability and the Environment
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