The Bridgetown Initiator - Ep145: Prof Avinash Persaud
Cleaning Up: Leadership in an Age of Climate Change
The Expensive Cost of Capital and Its Impact on Renewable Energy Financing
The average cost of capital for renewable energy projects significantly impacts financing availability across different regions. In poorer countries, consumers face a staggering 14% cost of capital, while wealthier nations like Germany, the US, UK, and Denmark experience a much lower rate of around 4%. This disparity discourages investors from participating in renewable energy ventures in developing regions, as the potential for profit is greater in areas with lower capital costs. As a result, 81% of renewable energy financing comes from the private sector in wealthier countries, compared to a mere 14% in developing nations. Governments in poorer countries struggle to bridge this gap due to limited financial resources, exacerbating the challenges in scaling renewable energy solutions in those markets.
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