Impact of state support mechanisms on the cost of renewable energy projects: The case of developing countries

Abstract

The effective investment of private capital in renewable energy projects is impossible without intensive and comprehensive support for investors from the state. However, each mechanism of state support is characterized by its own level of risk. Political instability may lead not only to the loss of investment, but also to a decrease in the investment attractiveness of renewable energy projects. This paper summarizes the main types of state support mechanisms, as well as their impact on the development of renewable energy sources (RES) around the world. As a result of the analysis, the types of investors in the global RES market are identified, taking into account their attitude to risk and profit. The paper presents an approach to assessing the level of impact of state support mechanisms on the cost of RES projects based on the evaluation of a system of investment indicators. The calculations are made using Russian RES projects as an example and taking into account their energy and regional features. The results of the study will be used for the development of a methodology for the comprehensive assessment of the effectiveness and appropriateness of state support measures for RES in developing countries, as well as for supplementing the existing approach to the study of competition in the global energy market with a deterministic assessment of the relevant risk. © 2019 WIT Press