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Is Belgium Overshooting in its Policy Support to Cut the Cost of Capital of Renewable Sources of Energy ?


  • Antonio Estache
  • Anne-Sophie Steichen


The main purpose of this paper is to document the differences in the cost of capital in Belgium across electricity generation companies, depending on whether they rely on traditional thermal sources or on RES. The average results are quite surprising and in sharp contrast with the results obtained for the UK or Germany by other researchersfor instancer. Comparing 3 main categories (renewable, non renewable and mixed), the Non-Renewable appear to have a lower CoC than the other in contrast to what the literature suggests should be expected The Vanilla CoC for the RES of our sample show lower CoC levels by around 30bps than for non-RES. The conclusion is the same from the analysis of the Pre-tax WACC. We take this as evidence that Belgium may have overshot in its efforts to stimulate investment to increase the relative importance of renewable energy sources, at least until the reduction in these efforts started in 2013

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  • Antonio Estache & Anne-Sophie Steichen, 2015. "Is Belgium Overshooting in its Policy Support to Cut the Cost of Capital of Renewable Sources of Energy ?," Working Papers ECARES ECARES 2015-13, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:eca:wpaper:2013/198443

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    References listed on IDEAS

    1. Alexander, Ian & Estache, Antonio & Oliveri, Adele, 2000. "A few things transport regulators should know about risk and the cost of capital," Utilities Policy, Elsevier, vol. 9(1), pages 1-13, March.
    2. Kirsten, Selder, 2014. "Renewable Energy Sources Act and Trading of Emission Certificates: A national and a supranational tool direct energy turnover to renewable electricity-supply in Germany," Energy Policy, Elsevier, vol. 64(C), pages 302-312.
    3. Lipp, Judith, 2007. "Lessons for effective renewable electricity policy from Denmark, Germany and the United Kingdom," Energy Policy, Elsevier, vol. 35(11), pages 5481-5495, November.
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