Financing renewable projects: a challenge

Financing    Sep 7, 2021 5:28 PM

Colombia is advancing in the energy transition process, but this process has presented several challenges and one of the main ones is project financing.

Some of the biggest problems that inhibited economic reactivation of this sector was the lack of cash flow and the impossibility of accessing credit financing in the renewable energy sector, Valora Analitik reported.

Angélica Arcila, CEO of Revaliu, said that this problem should not arise, as it is important to develop new energy proposals.

“Renewable energies produce a better quality of life thanks to the reduction of greenhouse gases,” Revaliu said.

Most companies in the sector have difficulty accessing investors, funds and credit for their projects, and many require high capital investments.

There are currently only three forms of financing for these projects in the market: the first is internal capital, whose investment depends on the resources of private companies. Then the most common is the financial market and multilateral entities that specialize in investing in different sectors through private funds.

Revaliu recommended seeking the support of specialists to structure financial projects tailored to each organization and establishing the magnitude of each project in economic terms. Experts should make the choice of the ideal source of financing based on the size of the project and the most convenient structure for each client, having clarity about the requirements for capital by evaluating equity and other possible sources of funding.

Bottom-Line: The government has established challenging goals, but authorities have not worked on strategies to facilitate project financing.

Authorities should remember that incentives, strategies and support will be key to fulfill the targets.

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