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This report explores the derisking of renewable energy investments in developing countries, focusing on illustrative modeling in South Africa. It highlights the capital intensity and financing costs associated with renewable energy projects. By analyzing the energy generation mix and selecting appropriate public instruments, the study aims to catalyze investments in the renewable sector. Utilizing a 20-year modeling period, it assesses the impacts of debt and equity costs and compares operational contributions to Levelized Cost of Energy (LCOE) in both developed and developing contexts.
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Derisking Renewable Energy InvestmentIn Developing Countries:IlustrativeModelling in South Africa YannickGlemarecUN Multi-Donor Trust Funds
The capital intensity of renewable energy Source: UNDP, DeriskingRenewable Energy Investment (2013). See Annex A of the report for full assumptions.
Financing costs for renewable energy Source: UNDP, DeriskingRenewable Energy Investment (2013). See Annex A of the report for full assumptions. All assumptions (technology costs, capital structure etc.) except for financing costs are kept constant between the developed and developing country. Operating costs appear as a lower contribution to LCOE in developing countries due to discounting effects from higher financing costs.
Selecting a public instrument mix to catalyse renewable energy investment Source: UNDP, DeriskingRenewable Energy Investment (2013).
Illustrative modelling case-study for South Africa (8.4 GW, wind): risk waterfalls Source: UNDP, DeriskingRenewable Energy Investment (2013). Data obtained from interviews with wind investors and developers. See Annex A of the report for full assumptions. The post-derisking cost of debt and equity show the average impacts over a 20 year modelling period, assuming linear timing effects.
Illustrative modelling results for South Africa (8.4 GW, wind) Source: UNDP, Derisking Renewable Energy Investment (2013). See Chapter 3 and Annex A of the report for full assumptions.