Financing Renewable Energy An Update on Barriers and Proposed Solutions By Kathleen Wade U.S. State Department, Office of Global Change in charge of international climate change-related issues, including negotiations like in Copenhagen, worked with the Foreign Affairs Officer in charge of financial issues and did several projects for him. Each were short and distinct, but many revolved around renewable energy. Now we all know how important clean energy is, but it’s not diffusing fast enough and one of the main challenges is finding finance

Barriers to Investment Risk is greater for renewable energy projects than traditional energy projects Intermittency Grid connection Economies of scale Perceived as a high-risk, low-return investment Intermittancy- needs backup power supply if wind’s not blowing Grid connection- infrastructure not in place, often needs to be in remote areas that may be far from the grid Economies of scale- technology is still developing, so there is a learning curve for operators, because of this, operations tend to be small scale

New Financial Models boo Public-private partnership to reduce risk. Private equity funds targeted specifically for renewable investments and supported by government policies.

New Policies Feed-in tariffs Utilities required to purchase power from renewable sources at fixed rate Rate rachets down over time to account for technological improvements Reduces uncertainty in rate of return Has worked awesome in Germany to stimulate the growth of wind power

International Partnerships Attended by ministers from 24 countries, including all major emitters, 11 New intergovernmental initiatives related to green buildings, solar power, Carbon Capture and Storage technology, and rural cooking stoves - Major Economies Forum, taskforces ranging from industry to vehicle emissions to solar power Clean Energy Ministerial- July 19-20, 2010

Carbon Markets Certified emissions reductions can be sold at market price UN Clean Development Mechanism certifies offsets for European market Not yet a significant source of finance for renewable energy Bogota Columbia TransMilenio bus transit system, registered with the CDM strict qualifications for CDM project, takes years to certify, but reforms may be made Thinking certifying emissions reductions for whole sectors, which may encourage utilities to back clean energy projects, but carbon markets tied to Kyoto, which ends in 2012

Go Green? Worlds of finance and clean energy must meet in order to spur low-carbon growth and assure a safe climate future