Amount of capital: Global investments in wind and solar projects is expected to range "from $165 billion to $190 billion per year between now and 2035."
Unit cost variation: Capital costs vary widely among geography and type of renewable energy. For example, solar projects can be developed for "$0.40 per watt in Portugal or Spain, versus $1.50 per watt in Japan. The global average is approximately $1.00 per watt for onshore wind and solar and $2.00 per watt for offshore wind."
Costs of debt financing: Onshore wind or large-scale solar PV projects can "currently be financed with 75% to 85% of leverage at 100-130 basis points over LIBOR (for investments in BBB credit-rated countries). This is very close to the lending rate a large bank would provide for a highway or an airport."
Source of investment: Between 2020 and 2035, here is the estimated percentage of capital coming from each source: Utilities 25%, Private capital funds 23%, Public companies 21%, Smaller developers 18%, Oil and gas 8%, and Pension funds 4%. To get the actual numbers, you have to purchase the report. :)
Risk management strategies: Much of the revenue in these projects has been via Power Purchase Agreements (PPAs). But much of the market, especially in wind, is moving to variable revenue models with greater dependence on merchant markets. This article suggests that "over the next five to 10 years, new hedging instruments are likely to become more robust and liquid, allowing asset owners to continue to deploy capital in a flexible way."
So, as we watch the US pull out of the Paris Climate Agreement, you might have desire to go cry in a pillow (or drop an anvil on a large stack of glass tables).
But, there is hope. Renewable energy project finance is now mainstream. Billions of dollars will continue to flow into the sector.
The trick is this: Who will finance this growth? What do they care about? And how do we as Entrepreneurs for Impact find the right fit with the right source of capital?
This article shines a little light on answers to these questions. Now we just need to amp up this market intelligence with (figuratively) a million deer lights shined in this direction.
(And, yes, it's deer hunting season in NorthCarolina right now. Based on a successful and cold outing last weekend, my buddies tell me that it's venison time.)