Finance, Competition and Power Markets

The previous chapter described the changing economics of wind energy and the rapid improvement in wind energy’s economic viability during the last decade. In spite of this, however, wind energy projects often continue to face obstacles obtaining finance for actual construction. This chapter therefore examines issues of finance by first outlining the differences between economic and financial viability and then describing some of the most important considerations when financing wind projects, such as cost of capital, capital structure, risk, debt-service coverage ratio, and others. The chapter then goes on to describe special considerations for financing projects in developing countries. Lastly, the chapter examines the increasingly competitive nature of power markets and how the advent of competition may affect the outlook for wind power development.