I attended and spoke at the 3rd Renewable Energy Finance Forum on Central and Eastern Europe in Prague. The event was attended by about 120 delegates including project developers, bankers, private equity financiers, lawyers, renewables manufacturers and consultants.
The overall sense I had was that prospects are still positive but this is a difficult region to be working in. The main concern for financiers and project developers alike is around the value of local currencies in comparison to the Euro. For project developers they worry about having to pay for renewables infrastructure in Euros but receiving returns on electricity generated in local currency, many of which have fallen sharply against the Euro in recent weeks . For both groups lack of long term policy measures in support of renewable electricity casts uncertainty of investments in certain countries or in certain technologies.
As ever grid connection and capacity remains an issue, but in general it was felt that capacity was sufficient for a range of new smaller projects The countries with the best tariffs, and in many cases renewable resources (e.g. the coast of Poland), have seen much development in recent times and its possible that some of the riskier ventures will struggle to see the year through. Financiers will continue to invest in the region but its clear they will only be looking at the very strongest of projects in countries showing the highest predictability for tariffs and currency rates. Its generally agreed that there is much opportunity in the region but for the next 6-12 months expect banks and financiers to only be investing with those groups (i.e. utilities) with which they have strong confidence and a long term relationship. Also expect them to be sticking with known and proven technologies, particularly wind and biomass. Financiers really do see the potential but now is a time for prudence. It is unlikely that local banks and financiers will step in to fill the gap left by foreign investors as for many local sources of money the renewables sector is a new area in which they have little experience. In addition, their mother institutions are pre-occupied with the current economic problems and are sending out conservative messages to their satellites.
On a more positive note, it was heartening to see the widespread acknowledgment of the benefits of implementing energy efficiency measures. The use of ESCO‘s is now a well understood concept. Indeed certain banks, such as the EBRD, are factoring energy efficiency potential into their lending criteria with willingness to adopt measures being seen as a boost to a borrowers credit rating. The fact that ESCO’s take on the risk of projects very reassuring to financiers as are the quick returns on investment.
The following BBC News article may be of interest to those following financing in the region: http://news.bbc.co.uk/2/hi/business/7914359.stm