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Impacts of Changing Renewable Energy Market Design on Institutional Onshore Wind Project Lenders

Ivanyshyn, M. (2016) Impacts of Changing Renewable Energy Market Design on Institutional Onshore Wind Project Lenders.

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Abstract:The EU has set itself ambitious energy policy goals: security of the energy supply, integration of the European energy market, efficiency of energy production and consumption, and de-carbonization of the economy. Achieving those goals would require substantial investments in renewable energy sources, particularly in wind farms. During the past two decades, the renewable energy policy framework in the EU has been focused on bridging the cost gap between renewable energy power plants and conventional technologies through fixed feed-in tariff subsidies. However, recently, the situation has changed: the cost of renewable energy generation has come down considerably and now support schemes have evolved toward more market-based incentives. Debt providers focused on the renewable energy construction market – especially project finance lenders – need to make changes to adapt to these new systems. The main objective of this paper is to answer the examine the impact of changing renewable energy market design, particularly the change towards a competitive bidding process and market-based subsidy schemes on institutional onshore wind project lenders. The process of answering this question involves analysis of the EU legislative frameworks for the Renewable Energy Sources, technical and economic aspects of wind energy production and direct examination of the project finance lending process in a universal bank. Using a combination of 'field' and 'desk' research methods such as systematic literature review, case studies, and interviews, the paper identifies the key aspects of the renewables support policy design which may directly or indirectly influence the project finance process. It further analyses the manner and extent of such influence. In the 'Conclusions and Recommendations' section the author explains how the EU and national policy changes (e.g. specific elements of subsidy scheme and auction design) affect project finance lenders, identifies the most relevant market trends caused by such policy changes, and provides specific recommendations that can be implemented into different stages of the project assessment process.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/70984
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