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OECD Paper Reviews Policies for Investing in Renewable Energy Plants

July 2011: The Organisation for Economic Co-operation and Development (OECD) has published a working paper entitled “Sources of Finance, Investment Policies and Plant Entry in the Renewable Energy Sector,” which reviews public policies promoting investment in renewable energies at the plant level.

Specifically this report, by Margarita Kalamova, Chris Kaminker, Nick Johnstone, examines policy impacts on market entry for new power plants via case studies from Germany, the United States and Australia. It has sections on: the renewables sector generally; financing of renewable energy financing, including types and sources of financing regulatory risk, and pricing risk; government policies for renewables; and power plant entry.

The main points of the paper include that: although a predictable policy environment is necessary to incentivize investments, this predictability should not be expected to be permanent when dealing with physical capital, such as power plants; and due to the nature of entrepreneurship where not every project is a success, public investment policy must be accepting that it will frequently meet with failure. [Publication: Sources of Finance, Investment Policies and Plant Entry in the Renewable Energy Sector]