Renewable Energy Project Finance

14th November 2023
Posted by: DMM
Category: Renewable Energy Solutions

With the undeniable impact of carbon emissions on our planet, the quest for cleaner energy has become imperative and with it the need for renewable energy project finance.

There is a growing consensus among scientists, policymakers, and the public that there needs to be a transition from traditional fossil fuels to renewable energy sources. WIth this we can begin to mitigate the adverse effects of climate change. Not only do these alternative energy sources create far less emissions than burning fossil fuels, but they also are replenished at a higher rate than they are used.

Let’s explore the significance of renewable energy and the various types available, including solar energy, wind energy, hydro energy, tidal energy, and geothermal energy.

Understanding Renewable Energy

Renewable energy refers to power derived from sustainable sources that are naturally replenished over time. Unlike fossil fuels such as coal, oil, and natural gas, which are finite and will eventually run out, renewable energy harnesses the earth’s natural processes, ensuring a continuous and sustainable supply. This shift towards renewable energy is essential to reducing greenhouse gas emissions and combating climate change.

Structured renewable energy project finance can provide up to 95% of project costs, for renewable projects with a minimum size of $20,000,000.

Renewable Energy Project Finance and Types of Renewable Energy

Solar Energy

Solar energy is perhaps the most recognisable and widely adopted form of renewable energy. It harnesses the power of the sun’s radiation, converting it into electricity or thermal energy. In fact, the rate at which solar energy is intercepted by
the earth is about 10,000 times greater than the rate at which we consume energy.

As technology advances and the efficiency and affordability of solar panels continue to improve, solar energy is becoming an increasingly viable option for powering homes, businesses, and entire communities.

Wind Energy

Wind energy utilises the kinetic energy of the wind to generate electricity, by powering large wind turbines. Onshore (located on land) and offshore (in sea or freshwater) wind farms have become prominent features of the energy landscape in many countries. While the average wind speeds can vary across countries and locations, there is sufficient potential in most parts of the world for significant wind energy production.

Hydro Energy

Hydropower, generated from the movement of water from a higher to lower elevation, is one of the most established forms of renewable energy. Hydropower provides a reliable and consistent source of energy, being the largest source of global renewable energy.

While large-scale hydroelectric dams do have a significant environmental impact, smaller-scale projects, such as run-of-river facilities, aim to minimise this while still harnessing water for sustainable energy production.

Ocean Energy

Ocean energy or tidal energy harnesses the natural kinetic and thermal energy of ocean waves and currents to generate electricity. While it is still in the early stages of development, ocean energy holds a great amount of potential as a reliable and predictable source of renewable power, with minimal environmental impact.

Geothermal Energy

Geothermal energy taps into the Earth’s internal heat to produce electricity and heat buildings, usually through the use of geothermal power plants or geothermal heat pumps. At the surface, geothermal energy can be a reliable and continuous source of power for generating electricity.

Biomass Energy

Biomass energy is slightly different from the rest of these renewable energy sources and derives from organic materials, such as plants, agricultural residues, and organic waste.

This biomass can be burned directly for heat or converted into biofuels, such as ethanol and biodiesel, to produce electricity. While the burning of biomass still does release greenhouse gas emissions, it does release them at a lower level than fossil fuels.

As greenhouse gas emissions only continue to increase and climate change becomes a greater challenge over time, the need for renewable energy sources is no longer a matter of debate but a critical imperative for the future of our planet. As the global community grapples with the climate challenge, the transition to renewable energy is not just a choice but a responsibility.

How to Get Renewable energy project finance

As we reach for a future powered by sustainable energy, financial considerations often emerge as a critical factor in the successful execution of renewable energy projects. To bridge the gap between vision and implementation, Developer Money Market (DMM) offers structured finance solutions tailored to support the development of renewable energy initiatives.

To help companies with their renewable energy projects, DMM’s structured finance offerings can provide a crucial lifeline by sourcing up to 95% of project costs, for renewable projects with a minimum size of $20,000,000.

The funding provided is not restricted by country, making it an attractive option for projects located anywhere internationally. While DMM can provide substantial financial support, borrowers are required to contribute at least 5% of the total project costs from their own equity.

In this climate challenge, companies need to start investing and looking to scale solutions that address the drivers of climate change. Governments, businesses, and individuals need to invest in research, development, and implementation of renewable energy technologies to accelerate the transition away from fossil fuels.

Developer Money Market is a specialist in strucutre funding solutions for international renewable energy projects.