Page 8 - AsiaElec Week 41

AsiaElec RENEWABLES AsiaElec
Poorer countries face higher green financing costs - study
ASIA
DEVELOPING countries are finding it more expensive to finance renewables energy projects, as risks in frontier economies are higher, thereby holding back the pro-green government policies promoted by many government and develop- ment finance institutes.
Mobilising finance remains a critical chal- lenge for poorer countries, and is still a criti- cal challenge for the global energy transition, according to a report from India’s Council on Energy, Environment and Water (CEEW).
“Financing costs account for the largest component, between 50% and 65%, of present day renewable energy tariffs in India, and even higher shares in other developing countries where the risk premium is higher,” said the CEEW.
The Council stressed that electricity demand was growing far faster in developing countries, even though they were relative latecomers in embracing renewables.
Demand in the developing world, with over
6bn energy consumers, is forecast by CCEW to grow by 30% over the next 15 years.
According to CEEW, renewable energy capacity addition in some developing countries has surpassed the addition of new fossil fuel- based generation plants.
Yet despite such progress, coal contributes 26 times more to the total primary energy supply in developing countries than renewable energy sources. The CCE called in its report for changes in financing costs in order to drive future declines in both solar and wind tariffs.
The clean energy sector could enjoy lower financing costs if suitable policy and market-led interventions could de-risk investments and increase competition between various sources of capital.
In India, while traditional sources of debt cap- ital, namely banks and non-bank financial insti- tutions, have driven investment flows into clean energy, these are not sufficient to bridge the gap between present and desired debt flows.™
Japan’s JERA takes majority ownership of Formosa 2 wind farm
TAIWAN
JAPANESE LNG trader and power generator JERA is to buy a 49% stake in the 376MW For- mosa 2 offshore wind project in Taiwan from Australia’s Macquarie Capital for an undisclosed sum as it widens its exposure to renewables.
JERA, which was formed by TEPCO and Chubu Electric Power Co, already holds a 32.5% stake in Taiwan’s 128MW Formosa 1, which was the country’s first commercial offshore wind project.
Formosa 2 is forecast to open at the end of 2021 and will boost JERA’s equity renewable capacity to 1.2GW. The company aims to have 5GW of green capacity by 2025, part of Japan’s drive to expand renewable energy.
JERA CEO Ken Matsuda said the total cost of the Formosa 2 project was expected to be a “few hundred billion yen,” Reuters reported.
The company is also considering investing in the adjacent 2GW Formosa 3 project, Matsuda said.
“Formosa 3 is still in the early discussion
stage and has not been decided, but we are in talks with parties involved with an aim to take a 30-40%stakeinthe2GWproject,”Matsudatold a news conference. Formosa 3 could be up and running between 2026 and 2030.
The second 120MW stage of Formosa 1, which is majority owned by Denmark’s Ørsted, was commissioned on September 5, 2019. For- mosa 1 is owned by Ørsted (35%), JERA (32.5%), Macquarie Capital (25%) and Swancor Renewa- ble Energy (7.5%).
Taiwan aims to have 5.7 GW offshore wind capacity by 2025. Ørsted is also developing the 900MW Greater Changhua 1 and 2a projects off Taiwan, located 35-60km off the coast of Chang- hua County at water depths of 30-35 metres.
Matsuda added that JERA was also looking to invest in offshore wind projects in Japan.
Japanese utilities such as JERA are facing pressure from investors on one side and envi- ronmental activists of the other to reduce their exposure to coal and to invest in renewables.™
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w w w . N E W S B A S E . c o m Week 41 15•October•2019