| IEE - Horizontal Key Actions (HKAs) | ||||
| IEE Key Actions | ||||
| IEE-HKA3-Financing mechanisms & incentives | ||||
Financing is often a critical issue in relation to RES and RUE. A key problem is that current energy prices do not reflect all the costs of energy. The characteristics of some investments, particularly on the demand side, are cost-effective over the lifetime of the investment but have comparatively long pay-back times acting as a disincentive to potential investors. Another barrier for RES and RUE investments is often their small scale, compared to investments to conventional energy supply-side investments, which make them less attractive to financing institutions. Some market actors also lack access to financial resources.
Different types of financing measures have been developed and applied in the past. These range from traditional subsidy schemes, through tax relief and exemptions to more innovative schemes such as third party financing and energy performance contracting. Previous work has also looked at the creation of Energy Service Companies or investment funds for energy efficiency and renewable energy sources, as well as at incentive schemes related to Demand Side Management measures (Third-Party Financing, Energy Performance Contracting). This Key Action aims to build on these previous experiences. It will also encompass supportive work for incentive schemes under a broader scope such as the Flexible Mechanisms under the Kyoto Protocol.
The objectives are to analyse the impact of existing financing instruments and identify key factors for their success and failure, to facilitate the development of innovative financial schemes tailormade for the financing of RES and RUE, the promotion of successful existing and newly developed schemes, and a regular and targeted exchange of experience of all stakeholders. The Target areas to be addressed are:
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