NIB: More investments in renewable energy needed after crisis

Speaking at the North European Renewable Energy Convention (NEREC) in Oslo, Harro Pitkänen, NIB Senior Director and Head of Business Development and Control, underlined that considerable investments will be required to meet the world’s growing energy needs.

He pointed out that investment needs are growing hand-in-hand with new challenges in the financial market.

“The financial markets have been affected by the global crisis, resulting in new, stricter rules, a focus on risk and higher costs,” Mr Pitkänen said, mentioning the Basel III regulations as an example.

He went on to say that renewable energy projects have to be weaned off subsidy addiction.

“Subsidy schemes may be in for revisions and cuts, as public financing deficits have to be reduced,” he said.

Mr Pitkänen added that increased unpredictability for long-term preferential tariffs schemes and reductions in demand due to lower energy consumption in the post-recession period may hamper investment.

He encouraged all stakeholders to ensure predictability in order to stimulate and sustain investment in renewable energy and enable resource mobilisation.

“We need to ensure a stable and balanced regulatory framework to provide a level playing field, as well as realistic tariff regimes that allow power suppliers to pass on their real costs,” Mr Pitkänen said.

From the banks’ point of view, willing and able borrowers are needed in order to lend.

“A willing borrower is prepared to take loans at prevailing interest rates to finance part of their investments and an able borrower is creditworthy enough to be able to service the loan,” Mr Pitkänen said, adding that banks should never provide loans for 100% of the project cost.

Outlining various types of loans, Mr Pitkänen finally challenged project developers to be honest in terms of potential pitfalls when presenting their business ideas.

“Don’t hide facts when presenting your business idea, because when a story is too good to be true, it usually isn’t,” Mr Pitkänen said. 

Mr Pitkänen was speaking to NEREC delegates representing key decision makers, industry experts, start-up companies and investors on effective resource mobilisation and how to secure a financial basis for renewable energy projects.