Analysis of the Financing Options for Pro-Ecological Projects

Jolanta Bijańska,Aneta Aleksander,Krzysztof Wodarski

doi:10.3390/en15062143

Jolanta Bijańska, Aneta Aleksander + Show 1 more

Open Access

https://doi.org/10.3390/en15062143

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Journal: Energies	Publication Date: Mar 15, 2022
Citations: 3	License type: CC BY 4.0

Affiliation: Silesian University of Technology

Abstract

The implementation of pro-ecological projects, including those in the field of renewable energy sources, should bring the desired effects, not only environmental or social, but also economic and financial. Although the latter should not prejudge the implementation of such projects, investors, who are primarily enterprises, need information on whether financing the project from specific, available sources is effective and when the incurred financial expenses will pay off. The publication presents a model that reflects the procedure in the analysis of financing opportunities for pro-ecological projects, aimed at maximizing their financial effects, with a consideration of specific risk factors and limitations. The result of the application of this model is information that supports making rational decisions about the implementation of a specific pro-ecological project. The model was positively verified within a case study concerning the purchase and assembly of a photovoltaic installation by a medium-sized company in Poland.

Highlights

The implementation of pro-ecological projects, including usage of renewable energy sources, is a very important element of the ecological policy of countries
cost–benefit analysis (CBA) makes it possible to compare all costs and benefits, of the investor, and “external” incurred by various groups of stakeholders. Since it is considered a method of policy effectiveness assessment [17], the CBA is recommended, inter alia, by the European Union (EU), to evaluate “large”
Capital cost analysis, including their assessment on the basis of CC, weighted average cost of capital (WACC) methods; Financial analysis, focused on the assessment of the financial effects of the project on the basis of the financial net present value (FNPV), financial rate of return (FRR), and financial discounted payback period (FDPP) methods; Analysis of the sensitivity of the project’s financial performance indicators to changes in specific risk factors; Analysis of the financial effectiveness of possible financing options for the project. The result of this stage of research is the model that reflects the procedure in the analysis of financing opportunities for pro-ecological projects, aimed at maximizing their financial effects, taking into account specific risk factors and limitations

Summary

Introduction

The implementation of pro-ecological projects, including usage of renewable energy sources, is a very important element of the ecological policy of countries. Regardless of the regulations adopted by a given state in the field of ecological policy, it is required that it be effective, i.e., bring the desired effects, environmental or social, and economic and financial. The latter is given a lot of attention, because the implementation of pro-ecological projects is capital-intensive—it requires financing of high investment outlays. For this reason, regardless of whether they are public projects or implemented by enterprises, the most effective sources of financing are sought, i.e., that have the lowest costs.

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