Financing Issues and Options for Renewable Energy Projects in South East Asia

Romel M. Carlos, Alan Dale C. Gonzales, Sundar Venkatesh


South East Asia is endowed with many indigenous and renewable fuel sources particularlyagricultural residues, wind and solar. Utilizing these resources in lieu of the often-polluting andlimited-resource fossil fuel is an avenue to mitigate greenhouse gasses which are harmful to theenvironment. Moreover, some of the technologies, equipment and processes currently being used inindustries in the region are old and often inefficient. These present great potential for activitiesleading to higher energy efficiency.

Some countries in South East Asia have made considerable progress in their support forbiomass energy. This support comes in different forms, including awareness-building throughinformation dissemination and technology demonstrations, support for energy audits, and financialincentives, among others. Despite these, not many projects related to biomass power generation andcogeneration are being implemented in south East Asia, compared with what can be potentiallyachieved. For many of these projects, financing is becoming the single-most important factor for thesuccess or failure of their implementation. The paper investigates the barriers, risks and successfactors related to the financing of these types of projects. Measures and options to remove thebarriers and mechanisms that are likely to facilitate financing of these projects are suggested.

The implementation of renewable energy projects can bring numerous benefits to the globalenvironment, the national government and the owner of the project. Some of the benefits include:
? more favourable environmental impact
? energy costs savings (reduced purchases of grid electricity, diesel and bunker oil)
? income from sales of excess electricity to the grid
? elimination of disposal costs associated with wastes and residues
? use of indigenous fuel resource
? reduction of financial burden for the public sector associated with investments in electricity generation and distribution

These concepts and technologies, however, still face barriers against widespread diffusionand are yet to gain wide market acceptance. These barriers can be institutional, technical and financial. This paper looks more closely on the financing aspects and the participation of the private sector in the development and implementation of these types of projects.

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