1. APEC Renewable Energy Financing Workshop
Honolulu
14 May 2004
Barrie Leay

2. Ambitous RE targets China Thailand Philippines US Australia
New Zealand

3. Criteria for Financing
Cost of the project
Country risk
Sector stability
Stability of cash flow/customer base
Existence of any take or pay contracts
Project structure including any construction contracts
Project construction time

4. Hurdles to obtaining financing
High capital to O&M cost ratio
High Development to Investment cost ratio
Small Total Investment Requirements
Difficulty Guaranteeing Cash Flow
Weak Basis for Non-Recourse Financing
Disproportionately high transaction costs
Inaccurate Perception of Risk
Inaccurate pricing of energy production costs

5. Investment Risks of RE Projects
Credit risk
Construction and development risk
Operating/Commercial risk
Political risk
Financial risk
Force Majeure

6. Impact of Project Size and Type
On grid
Large energy companies or developers
Financial strength, bank debt, project finance and balance sheet debt
Off grid
Small projects
Bigger financing obstacles
Unpredictable cash flows
More risky for investors and lenders

7. Development Funds provide many forms of assistance
Seed capital for demonstration projects
Business development grants to SME’s
Lines of credit to local banks
Credit enhancements for risk guarantees
Interest-rate subsidies
SME growth capital funds