Research and analysis

Policy risk in renewable energy investments in developing countries - a study by Cambridge Economic Policy Associates for DECC

Options to address ‘policy risk’, such as retroactive changes to feed-in tariffs, in renewable energy investments in developing countries.

• From: Department of Energy & Climate Change
• Published: 28 November 2014

Documents

Policy risk in renewable energy investments in developing countries - a study by Cambridge Economic Policy Associates for DECC

PDF, 1.58 MB, 157 pages

This file may not be suitable for users of assistive technology.

Request an accessible format.

If you use assistive technology (such as a screen reader) and need a version of this document in a more accessible format, please email enquiries@beis.gov.uk. Please tell us what format you need. It will help us if you say what assistive technology you use.

Details

The UK’s Capital Markets Climate Initiative highlighted ‘policy risk’ as a potential barrier to renewable energy investment in developing countries. ‘Policy risk’ refers to policy changes by government that can affect the financial viability of projects, such as retroactive changes to feed-in tariffs.

DECC subsequently funded a study into options to address policy risk, focusing on renewable energy projects in Africa and Asia. The study assesses the extent to which policy risk deters investors, identifies existing mechanisms that can mitigate policy risk (such as partial risk guarantees and political risk insurance), and make recommendations to improve these mechanisms.

The study was carried out in the context of developed countries’ commitment to mobilise climate finance for developing countries. The UK provides climate finance through the £3.87 billion International Climate Fund. The study was carried out by Cambridge Economic Policy Associates (CEPA).

Published 28 November 2014