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Risks and cost of capital for onshore wind energy investments in EU countries

Author

Listed:
  • Dimitrios Angelopoulos
  • Robert Brückmann
  • Filip JirouÅ¡
  • Inga KonstantinaviÄ iÅ«tÄ—
  • Paul Noothout
  • John Psarras
  • Lucie Tesnière
  • Barbara Breitschopf

Abstract

The national binding targets, set for renewable energy deployment at European Union (EU), call for extended clean energy investments. Renewable energy projects require high up-front expenditures including, in many cases, considerable financing costs. The main objective of this paper is to elaborate and apply a methodology that allows assessing the most important risk categories related to renewable energy investments. The cornerstone of this approach is the weighted average cost of capital, which has been extracted for new onshore wind projects in EU-28 member states based on diverse methods e.g. Capital Asset Pricing Model. Moreover, to validate the model results, a series of interviews with renewable energy project developers and financers across the EU has been conducted. The results show that, following the country risk, policy-related risks exert the highest impact on the cost of capital. Moreover, there are significant discrepancies between different geographical regions and market deployment levels. To support policy makers' decision on effective risk-reducing policy designs, the assessment could also be extended to other renewable energy technologies.

Suggested Citation

  • Dimitrios Angelopoulos & Robert Brückmann & Filip JirouÅ¡ & Inga KonstantinaviÄ iÅ«tÄ— & Paul Noothout & John Psarras & Lucie Tesnière & Barbara Breitschopf, 2016. "Risks and cost of capital for onshore wind energy investments in EU countries," Energy & Environment, , vol. 27(1), pages 82-104, February.
    • Handle: RePEc:sae:engenv:v:27:y:2016:i:1:p:82-104
    DOI: 10.1177/0958305X16638573
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    1. Sakka, Evelyn G. & Bilionis, Dimitrios V. & Vamvatsikos, Dimitrios & Gantes, Charis J., 2020. "Onshore wind farm siting prioritization based on investment profitability for Greece," Renewable Energy, Elsevier, vol. 146(C), pages 2827-2839.
    2. Rosales-Asensio, Enrique & Borge-Diez, David & Blanes-Peiró, Jorge-Juan & Pérez-Hoyos, Ana & Comenar-Santos, Antonio, 2019. "Review of wind energy technology and associated market and economic conditions in Spain," Renewable and Sustainable Energy Reviews, Elsevier, vol. 101(C), pages 415-427.
    3. Angelopoulos, Dimitrios & Doukas, Haris & Psarras, John & Stamtsis, Giorgos, 2017. "Risk-based analysis and policy implications for renewable energy investments in Greece," Energy Policy, Elsevier, vol. 105(C), pages 512-523.
    4. Bachner, Gabriel & Steininger, Karl W. & Williges, Keith & Tuerk, Andreas, 2019. "The economy-wide effects of large-scale renewable electricity expansion in Europe: The role of integration costs," Renewable Energy, Elsevier, vol. 134(C), pages 1369-1380.
    5. Hu, Jing & Harmsen, Robert & Crijns-Graus, Wina & Worrell, Ernst, 2018. "Barriers to investment in utility-scale variable renewable electricity (VRE) generation projects," Renewable Energy, Elsevier, vol. 121(C), pages 730-744.

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