Cost of capital for renewable energy investments in developing economies

This discussion paper gives a brief overview of the methodology, including an analysis of the required rate of equity return or debt for solar projects, by country, under current cost-of-capital environments. While specific rates can vary considerably depending on conditions at the time of project finance needs, the overall take away is that cost of capital is a significant barrier. To address this, the paper proposes a credit guarantee facility that could help address these cost-of-capital issues, allowing countries with high solar potential to reduce some of these barriers and significantly increase their installed capacity.

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