- **Short run financial crises do affect neither the decision to enter the renewable market nor than the level of investment, proving the resilience of renewable-based energy to such shocks.**

In a nutshell, the policy and regulatory regime will be assessed across all aspects of the project, not just the support or incentive mechanism. This would include: the planning and approval process, given the potential for costly delays to construction which defer the point at which a project will start generating revenue; grid or infrastructure access and availability; power purchase agreements and so on – all aspects within the boundary of the project or that could affect company activity.

Moving this analysis forward, our future research aims to look at a more detailed analysis and policy recommendation on specific factors that could contribute to successfully attract investment in developing countries, by looking at the two issues reported below:

- **Incentive schemes.** What types of incentive schemes proved to be the most successful in attracting private investment in renewable generated electricity? The importance of details of feed-in tariff system design, which may include capping (government-established limit on installation); tariffs differentiated by technology; tariff inflation-indexation; duration. All of these design factors will make the business environment for renewable-based energy, or less, attractive to private investors. Further work is planned to look at to what extent the level of feed-in tariff vis-à-vis other characteristics (including the time duration and those mentioned above) affect private investment in renewable-based generation.

- **Financing and affordability issues:** Ultimately, financing choice rests between (today and tomorrow) users and (developing and developed countries‟) taxpayer (tomorrow‟s users, if financed through borrowing, developed countries‟ taxpayers if financed through ODA). Where feed-in tariffs have been employed in developing countries, they often have to be met by government budgetary allocations to cover the differential between the guaranteed price that the utility pays to the renewable energy suppliers, and the average rate that it is allowed to charge consumers for each kilowatt hour of electricity. This dependence on national budgets to cover the difference places a cap on the total expansion of renewable energy that can take place in a developing country, and thus creates a disincentive for expanded renewable energy investment. Within this context, alternative support schemes, including through a “global feed-in tariff”, a payment-on-delivery mechanism, whereby funds flow only when electricity comes on line; that is, when real and tangible benefits are being provided. Whereas they have been cases where costs has been borne by the taxpayers, in most cases will be passed through consumers, raising formidable affordability issues. There are ways to protect poor consumers, but at the same time allowing for some partial pass through of feed-in tariffs. The incremental cost associated with renewable based generation can be, for instance, recovered for instance only through large customers.

# **References**

Burer, Mary Jean; Wustenhagen, Rolf; 2009. Which Renewable Energy Policy is a Venture Capitalist‟s Best Friend? Empirical Evidence from a Survey of International Clean Tech Investors, Energy Policy, Vol. 37, 49975006.

Cory, Karlynn; Couture, Toby; Kreycik, C.; 2009. Feed-in Tariff Policy: Design, Implementation and RPS Policy Interactions, Technical Report NREL/TP-6A2-45549, http://www.nrel.gov/docs/fy09osti/45549.pdf 23