Risk mitigation instruments for renewable energy in Developing Countries: a case study on hydropower in Africa
This case study analyzes the financial structure of the Bujagali Hydropower project in Uganda. As one of very few examples of a project where various risk mitigation instruments have been used in combination, Bujagali offers a unique opportunity to assess the effectiveness of these instruments in supporting private renewable energy investments in high-risk environments (such as least developed countries), and to consider their potential for replication at scale. This case study examines the benefits and costs of these risk mitigations tools, to draw lessons on how they might drive private investment in other renewable energy projects in developing countries, while lowering capital costs and increasing the affordability of power for the country. It does not evaluate the overall economic, social and environmental impacts of the Bujagali project, nor the controversies it generated. Finally, it does not aim to take a position on the merits and potential of large hydropower in the transition to a low-carbon economy.