252
C. N. Nwedu
which are argued to be more severe in developing countries.
92 Though
unsurprisingly, RES-E development projects in developing countries
have inherent challenges, which include:
• a higher capital cost which can be intensified by cost discrepancies in
funding,
• perceivable higher risks likely to raise the cost of financing and equity
share in a project’s funding arrangement,
• lack of suitably domestic equity finance and debt finance maturity, in
particular, of private equity, and
• overall, low prices of generated RES-E, which can constrain cost
recapture.
93
There are other several studies that have identified detailed constraints to
RES-E.
94 Traditionally, power project is always capital-intensive. Therefore, for the government, it is an unbearable financial burden, especially
on budgets.
95 The risks extend to other different types of interlaced
constraints involving:
• construction, operation, foreign exchange and country risks,
96
• off-taker risk,
97
92 Ibid.
93 Ibid.
94 Rainer Quitzow and others, ‘The Future of Africa’s Energy Supply: Potentials and Development Options for Renewable Energy (2016) IASS, https://publications.iass-potsdam.2016.008,
accessed 20 April 2020.
95 Antonio Castellano and others, ‘Electric Power and Natural Gas: Brighter Africa:
The Growth Potential of the Sub-Saharan Electricity Sector’ (2015) McKinsey and
Company, https://www.mckinsey.com/~/media/McKinsey/dotcom/client_service/EPNG/PDFs/
Brighter_Africa-The_growth_potential_of_the_sub-Saharan_electricity_sector.ashx, accessed 20
April 2020
96 Quitzow and others (n 90).
97 Anton Eberhard and others, Independent Power Projects in Sub-Saharan Africa: Lessons from
Five Key Countries (Washington, DC: World Bank 2016).
C. N. Nwedu
which are argued to be more severe in developing countries.
92 Though
unsurprisingly, RES-E development projects in developing countries
have inherent challenges, which include:
• a higher capital cost which can be intensified by cost discrepancies in
funding,
• perceivable higher risks likely to raise the cost of financing and equity
share in a project’s funding arrangement,
• lack of suitably domestic equity finance and debt finance maturity, in
particular, of private equity, and
• overall, low prices of generated RES-E, which can constrain cost
recapture.
93
There are other several studies that have identified detailed constraints to
RES-E.
94 Traditionally, power project is always capital-intensive. Therefore, for the government, it is an unbearable financial burden, especially
on budgets.
95 The risks extend to other different types of interlaced
constraints involving:
• construction, operation, foreign exchange and country risks,
96
• off-taker risk,
97
92 Ibid.
93 Ibid.
94 Rainer Quitzow and others, ‘The Future of Africa’s Energy Supply: Potentials and Development Options for Renewable Energy (2016) IASS, https://publications.iass-potsdam.2016.008,
accessed 20 April 2020.
95 Antonio Castellano and others, ‘Electric Power and Natural Gas: Brighter Africa:
The Growth Potential of the Sub-Saharan Electricity Sector’ (2015) McKinsey and
Company, https://www.mckinsey.com/~/media/McKinsey/dotcom/client_service/EPNG/PDFs/
Brighter_Africa-The_growth_potential_of_the_sub-Saharan_electricity_sector.ashx, accessed 20
April 2020
96 Quitzow and others (n 90).
97 Anton Eberhard and others, Independent Power Projects in Sub-Saharan Africa: Lessons from
Five Key Countries (Washington, DC: World Bank 2016).