Long Term Financing for Global RE Projects

Long term financing options for renewable energy projects are soon to be expanded through a multi-national plan between member countries of the The Organisation for Economic Co-operation and Development (OECD).

OECD Countries that participate in the Arrangement on Officially Supported Export Credits have agreed special financial terms for renewable energy and water projects, starting on 1 July 2005 for a two-year trial basis. This agreement will promote the use of renewable energy resources and help increase access to safe drinking water. The arrangement is in line with commitments made at the 2002 Johannesburg World Summit on Sustainable Development and to the Millennium Development Goals. The special terms for renewable energies and water projects will allow borrowers extended repayment terms of 15 years; this is comparable to the present credit terms available for nuclear power plants under an OECD arrangement and is more favorable than the 12-year terms available for conventional power projects or the 8.5/10-years for water projects. This will enhance the economic and financial viability of such projects, encouraging a wider market and general acceptance of renewable energy technologies especially in developing countries. The renewable energies covered by the agreement are wind energy, geothermal energy, tidal and stream power, wave power, solar photovoltaic power, solar thermal energy, ocean thermal energy and bio-energy. Water projects covered by the agreement are those related to the supply of water for human use and wastewater treatment facilities. The Chairman of the Participants to the OECD Export Credit Arrangement, Ms. Nicole Bollen, welcomed the agreement, noting that the extended repayment terms for renewable energy technologies should make these more competitive than conventional energy sources and those for water projects should improve access to water and sanitation for developing countries.

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