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Debt For Brands: Tracking Down A Bias In Financing Photovoltaic Projects In Germany
Journal
Journal of Cleaner Production
ISSN
0959-6526
ISSN-Digital
1879-1786
Type
journal article
Date Issued
2011-08
Author(s)
Lüdeke-Freund, Florian
Abstract
What kinds of PV project configurations do lenders prefer to finance? Recent developments in the field of renewable energy project finance have reinforced the need for investigation, as fundraising has become more challenging and project evaluation by banks more demanding. To contribute to the limited research in this field, we focus on photovoltaic projects and report from an Adaptive Choice-Based Conjoint experiment with German experts in project finance. We find a bias which we call "debt for brands". Simulations reveal that debt investors prefer projects with premium brand technology (modules, inverters) to low-cost technology. Although we assumed that lenders prefer projects with the highest Debt Service Cover Ratio (DSCR), they favour projects with lower DSCR, as long as those projects include premium brand technology. We find that, if premium brands were engaged, lenders would also choose projects with higher risk. Our findings have implications for renewable energy project finance in practice and research
Language
English
Keywords
project finance
renewable energy
photovoltaic
business models
conjoint analysis
HSG Classification
not classified
Refereed
Yes
Publisher
Elsevier
Publisher place
Amsterdam
Volume
19
Number
12
Start page
1356
End page
1364
Pages
9
Subject(s)
Division(s)
Eprints ID
105335