Project Or Corporate Finance For Renewable Energy?

Abstract

Project finance is gaining more importance for renewable energy projects. I present an agent-based benchmark model of finance opportunities for renewable energy projects. Investors can decide to invest into an equity-based financing intermediary, starting a new power plant project via a special purpose vehicle, or can opt for a debt-based solution via corporate finance. The model includes different kinds of market imperfections and therefore yields a more dynamic, bottom-up view on renewable energy finance than commonly employed static or historic analyses (see, for example [1-2]). By constructing simplified baseline scenarios, I obtain different mixtures of corporate vs. project finance as a proof of principle