Financing the UK's renewable energy boom
by David Lindley
International Journal of Global Energy Issues (IJGEI), Vol. 8, No. 5/6, 1996

Abstract: The opportunity to invest in and operate renewable energy power projects in the United Kingdom is the result of the financial measures established by the Electricity Act 1989, which created the Non-Fossil Fuel Obligation. In the three different orders specified so far, approximately 1400 MW (declared net capacity) of contracts have been awarded to schemes generating electricity from wind, hydro, landfill gas, sewage gas, waste combustion and other combustion (using forestry wastes and biomass) schemes. The majority of projects that have become operational so far have been financed either on 'balance sheet' or by a combination of non-recourse or limited recourse project loans and investor equity. In order to fulfil the government's goal to have 1500 MW (declared net capacity) of electricity from renewables by 2000 a total investment of in excess of £1.5 billion will be required. This paper reviews the terms of the Non Fossil Fuel Obligation, gives details of contracts awarded so far, reviews the financing methods used, summarises the project risks and the means of mitigation and provides case histories of several different renewable energy projects financed in the UK.

Online publication date: Mon, 14-Jul-2014

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