ADB Deems Clean Energy Projects as Risky
The thrust to create so-called “clean” energy projects is hampered by poor financial risk perception, need for big capital investments and policies that still favor conventional sources of energy, an official of the Asian Development Bank (ADB) recently announced. Stating at the Asia Clean Energy Forum at the ADB headquarters this week, Private Sector Operations Department Director-General Philip Erquiaga said these three impediments are what the bank will take into consideration drafting a new energy policy.
Mr. Erquiaga explained the perception of risk is because of the view regarding clean energy technology is “experimental,” creating it financially risky as an investment.
Rizal Commercial Banking Corp. Senior Vice-President for financial markets Marcelo E. Ayes agreed, evaluating that “many of the companies producing this technology are start-up and will have difficulty accessing credit because they don’t have a track record.”
Noting further that these projects are “capital-intensive,” Mr. Ayes stated the “risk is huge without certain profit even in the long term.”
He said that a well-designed feasibility study and a guarantee by the government, ADB or the World Bank are few of the factors that could better risk perception.
Energy Assistant Secretary Mario C. Marasigan, chief of the Renewable Energy Bureau, stated the government has addressed the concern over policy drawbacks, citing Republic Act 9513, or the Renewable Energy Act of 2008, which provides fiscal and non-fiscal incentives for renewable energy investors, involving tax credits on domestic capital equipment and services, special tax rates on equipment and machinery, amidst others.
This will bring down the price of technology and make ‘clean,’ renewable energy competitive with conventional energy. The law is a clear indicator that this government prioritizes renewable energy.
Read more about Investing in Renewable Technologies: Wind, Solar, Geotherm, Hydro, Biomass
Sir,
It is not proper to generalise that all clean projects are risky and even in long term they do not make profits.
Each project has its own start up challenges as they are green field industries.
ADB is required to take the risk in supporting clean energy projects and once it is proven successfully, the clean energy sector will attract large private sector investment.
The clean energy projects are a boon to the farmers and the rural community and it is also environmental friendly.
ADB’s mandate is to reduce poverty and there is no other project that can meet this objective better than the clean energy sector.
Clean energy businesses are in a boom and could be classified as new businesses becasue of new technology. Therefore, business oriented investors should know that they have potential for more than normal profit (recall economic profit from your economic class). It is a real industry and is here to stay. Technically is sound and has already a proven record specially solar and wind. It is amazing how it has not been recognized before as a viable investement. Of course, some precautions should be taken before investing so to prevent bad deals. But, overall is very good invenstement. It is very important to invest at the right time. Usually the first in are the ones reaping the larger economic profits.