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    Managing Credit Risk and Improving Access to Finance in Green Energy Projects

    Dhruba, Purkayastha | August 2018
    Abstract
    The cost of finance has a relatively high impact on the returns and viability of clean energy projects compared with fossil fuel-based energy projects, because the operating costs for renewable energy projects are very low. Credit risk assessment and ratings, which have usually been an inappropriate measure of credit risk for clean energy finance, have a significant influence on the cost of finance. Factors like inadequate credit information, a lack of historical data at the project level, and the higher risk of technological obsolescence lead to credit market failure in clean energy finance, leading to mispricing of risk and poor capital allocation to clean energy infrastructure in the economy. Access to institutional finance is more constrained in the distributed renewable energy sector, as the transaction costs are high, consumer credit risk is high or unknown, and a variety of other challenges exist. It is important to ease these constraints, through appropriate policy and financing interventions to crowd in domestic banks, by improving the quality of credit information, both technical and commercial, creating suitable financial intermediaries, and providing risk mitigation solutions.
    Citation
    Dhruba, Purkayastha. 2018. Managing Credit Risk and Improving Access to Finance in Green Energy Projects. © Asian Development Bank Institute. http://hdl.handle.net/11540/8634.
    Keywords
    Household Energy Consumption
    Industrial Energy Consumption
    Results-Based Monitoring And Evaluation
    Evaluation Techniques
    Evaluation Studies
    Evaluation Methods
    Commercial Energy
    Urban Development Finance
    Trade Finance
    Small Business Finance
    Rural Finance
    Roundtable on International Trade and Finance
    Regional Development Finance
    Public Service Finance
    Public Finance
    Project Finance
    Private Finance
    Nonbank Financing
    Non-Bank Financial Institutions
    Municipal Finance
    Local Government Finance
    Local Currency Financing
    Limited Resource Financing
    International Financial Institutions
    Infrastructure Financing
    Industrial Finance
    Government Financial Institutions
    Government Finance
    Financing of Infrastructure
    Financial Sector Development
    Financial Regulation
    Domestic Energy
    Energy Demand
    Energy Prices
    Energy Pricing Policy
    Energy Supply
    Primary Energy Supply
    Development Indicators
    Social Participation
    Low Income Groups
    Income Generation
    Newly Industrializing Countries
    Taxation
    Public Accounting
    National Budget
    Municipal Bonds
    Local Government
    Local Taxes
    International Monetary Relations
    International Financial Market
    International Banking
    Central Banks
    Business Financing
    Capital Resources
    Budgetary Policy
    Capital Needs
    Corporate Divestiture
    Capital Instruments
    Pension Funds
    Insurance Companies
    Banks
    Portfolio Management
    Fiscal Administration
    Economics of Education
    Development Banks
    Renewable energy resource
    Green Energy
    Power resource
    Electric power
    Energy development
    Renewable energy resource
    Solar
    Energy assistance
    Energy tax credit
    Electric power consumption
    Cost effectiveness
    Supply and demand
    Prices
    Energy resource
    Energy consumption
    Price Indexes
    Infrastructure
    Use tax
    Taxing power
    State of taxation
    Tax-sales
    Tax revenue estimating
    Tax planning
    Spendings tax
    Special assessments
    Tax administration and procedure
    Sales tax
    Real property and taxation
    Progressive taxation
    Effect of taxation on land use
    Effect of taxation on labor supply
    Intergovernmental tax relations
    Inheritance and transfer tax
    Energy tax
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    Citable URI
    http://hdl.handle.net/11540/8634
    Metadata
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    Author
    Dhruba, Purkayastha
    Theme
    Energy
    Finance
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise