Caspian Energy Journal Caspian European Club
November 2018
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Wednesday, 24 October 2018 15:00

EMEA subsidy-free renewables projects gain momentum, Fitch

EMEA subsidy-free renewables projects gain momentum, Fitch

Capital costs of renewable energy projects have dropped significantly in the past several years, making subsidy-free schemes a viable option in the 2020s in Europe, Fitch Ratings says. Merchant projects that rely on market prices and volumes are riskier and require lower leverage to achieve equivalent ratings to subsidised projects, Caspian Energy News ( reports with reference to Fitch Ratings.

Technological improvements have helped reduce capital and installation costs of renewable energy, making new projects potentially feasible without government support. In 2016-2017, winners of several capacity auctions in Germany, the Netherlands and Spain were able to propose building renewable projects fully relying on market power pricing only.

Fitch expects a considerable number of new renewable projects to continue to rely on subsidies, although the share of those without subsides is likely to gradually increase. Subsidy-free projects will be concentrated in developed countries that benefit from established power markets and stable regulatory frameworks, where investors require a lower internal rate of return on their investments.

Transition to subsidy-free renewables is positive overall, as the burden on governments and, ultimately, consumers to support the sector is set to lower over time.

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Person in charge of the newsline: Olga Nagiyeva 

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