Proceedings of the 6th International Conference on Advanced Research in Management, Economics and Accounting
Year: 2024
DOI:
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A Conceptual Funding Structure Framework for Renewable Energy Independent Power Producer Infrastructure Projects
Mohube Nkadimeng and Makgopa Tshehla
ABSTRACT:
Access to sustainable energy in Developing Economies is a concerning issue. The current energy supply fails to meet the growing demand for households and businesses, as recognised by The United Nations Educational and Cultural Organisation (UNESCO) 2030 programme on sustainable development. Despite the urgent need to electrify Developing Economies, Small and medium size Renewable Energy Independent Power Producers (REIPP) companies face significant challenge in securing appropriate funding for energy transitions. Current funding structures are insufficient to address REIPP funding dynamics. The aim of the study is to propose a blended model by incorporating other financial instruments which attract the lowest interest, or no interest at all, denominated in local currency to fund REIPP projects in developing economies, given that developing economies capital markets and the banking sectors are poorly developed. The study adopted a systematic literature review research design to develop structure that incorporate community participation and evaluate data related to REIPP and country risk factors. The finding reveals that existing funding structures fail to incorporate other financial assets with low interest rates while taking in to account country risk factors. Hence, this study will serve to provide local community organisations and small to medium size REIPP’s with alternative funding models that incorporate community involvement in Renewable Energy (RE) projects. The study makes contribution to general finance literature.
keywords: Developing Economies; funding structures; Renewable energy independent Power Producers, Capital Structure, Risk