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What Matters for Private Investment Financing in Renewable Energy Globally and in Asia?

Author

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  • Azhgaliyeva, Dina

    (Asian Development Bank Institute)

  • Beirne, John

    (Asian Development Bank Institute)

  • Mishra, Ranjeeta

    (Asian Development Bank Institute)

Abstract

We examine the drivers of private investment in renewable energy by source of funding for 13 global economies over the period 2008 to 2018, with a focus on a sub-panel of Asian economies. Using a seemingly unrelated regression model, we provide a first quantitative estimate of the effect of government renewable energy policies on private investments across different sources of financing. Our results indicate that feed-in-tariffs (FITs) have the greatest overall effect in Asia on driving private investment in renewable energy, particularly from asset finance compared with other funding sources. The impact of FITs in Asia is also greater than that of the global sample. The impact of FITs is amplified in the presence of lower regulatory quality, which may be related to ease of market entry. We also find an important role in Asia for government expenditure on research and development in stimulating private investment. The magnitudes of the effects in Asia are broadly in line with the overall global sample. Finally, we find that technology costs, are less elastic on private investment in Asia compared with globally in affecting private investment in renewable energy across all funding sources, which may be related to the prevailing strong cost competitiveness of Asian economies in renewable energy provision.

Suggested Citation

  • Azhgaliyeva, Dina & Beirne, John & Mishra, Ranjeeta, 2021. "What Matters for Private Investment Financing in Renewable Energy Globally and in Asia?," ADBI Working Papers 1246, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:1246
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    2. Dina Azhgaliyeva & Ranjeeta Mishra, 2022. "Feed‐in tariffs for financing renewable energy in Southeast Asia," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 11(3), May.
    3. William Philip Wall & Bilal Khalid & Mariusz Urbański & Michal Kot, 2021. "Factors Influencing Consumer’s Adoption of Renewable Energy," Energies, MDPI, vol. 14(17), pages 1-19, August.

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    More about this item

    Keywords

    private investment; public investment; renewable energy; green investment; feed-in tariff;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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