How to attract Wind-Investments in Emerging Markets

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• How to attract Wind-Investments in Emerging
  Markets
• a project developers point of view
• Christian Friebe,
• Dr Paschen v. Flotow,
• Sustainable Business Institute (SBI), Germany
• EWEA Annual Conference
• Session World Wide Wind
• March 2011

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Wind Energy Potential
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Influencing factors for policy makers in emerging
countries regarding energy infrastructure
Rising energy demand
Energy subsidies
(Inter-)National Climate Change Mitigation
Measures
Price volatility
Power mix based on fossil fuels
Energy Security
External costs
Depending on the evaluation of these factors
there is an opportunity for wind power.
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What is the right policy mix for wind energy in
emerging countries?
What is the role of the public sector?
How to minimize the costs for electricity?
How to share risk and profit?
What is the role of the private sector?
Which support mechanism?
Are there other important factors?
Understanding the rationale of an investor helps
to design more effective policies.
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SBI Wind Investment Study - evaluation of the
preferences of the private sector
Qualitative 11 Interviews (May und June 2010)
Quantitative Survey, 41 responses by project
developers (July und August 2010)
Qualitative one day workshop with 14 experts
(November 2010)
Some involved companies and organizations are
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Key messages 1 Support mechanism

• Quota-System
• High risks lead to high financing costs

• International Tender
• Discontinuous market development
• Transparency?

Feed-in-Tariff is the most attractive support
mechanism
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Key messages 2 Non-financial aspects

• Local content requirements
• Challenging for investors (even with bonus!)

• one-stop-shop dont do it!
• Lack of Transparency
• Additional administrative barrier

Very attractive for project developers Legal
security Transparency Low risk of unforeseen
changes Known duration of the approval process
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Key messages 3 Grid access and power dispatch
No guarantee for grid access and power dispatch
is very challenging for an investor.
??
A guaranteed grid access and power dispatch is
an attractive framework condition.
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Key messages 4 How and where to start?
Framework conditions that are either extremely
attractive or not attractive for investors.
A continuous approach is best for all
stakeholders.
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How to further use the results?
The study is not a blueprint for the perfect
support mechanism.
Policy makers can increase the attractiveness of
their country at little cost
Transparency, duration of the approval process,
no unforeseen policy changes
Support for international climate change
initiatives Global FIT and others
Further studies on a country level lead to more
specific recommendations.
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• Thank you for your attention
• www.cfi21.org

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• Backup

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CFI - Climate Change, Financial Markets and
Innovation

• Increase the application of clean tech
  innovations
• Venture Capital for clean technologies
• Financing of infrastructure through Public
  Private Partnerships
• Financing of selected technologies

• Project partners
• Sustainable Business Institute (SBI)
• Climate Change Finance Forum
• Financed by the German Ministry of Research and
  Education (BMBF)

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The impact of risk on the total power generation
costs
Framework conditions by policy makers
Costs for the technology
Risk and return perception of the investor
Costs for green electricity
Jager, D. Rathmann, M. (2008) "Policy
instrument design to reduce financing costs in
renewable energy technology projects". Paris.
IEA, OECD.
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Sample of the survey

• Participants of the study
• The participants had up to 28 years of
  professional experience

• Companies where the participants work
• 75 of the companies had a high strategic focus
  on small emerging countries

Responsibility of the participants
Headquarter of the companies
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The respondents have a broad professional
experience in different emerging markets
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One example from the survey
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Application of a new method in the field of
investment preferences Maximum-Difference-Scalin
g

1. Identify the 20 most important aspects when
   facing an investment decision in an emerging
   country
2. Identify experienced project developers (158
   Persons, 25 return rate)
3. Each person answers 12 questions
4. Statistical Analysis Hierachical Bayes
   estimation rescaling of the results

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Findings Overview
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Support mechanism
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Financial aspects
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Non financial aspects
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Grid access and power dispatch