Financing hydroelectric power plants: a review and evaluation of financing channels

Abstract

PurposeThis study aims to identify project funding shortcomings in the existing literature and evaluate the financing channels accordingly.Design/methodology/approachThis paper uses a structured literature review – a content analysis method. Then, the comparative analysis applied to data gathered from the content analysis.FindingsTo define the main research topics and establish a focus on hydroelectric power plant (HEPP) financing, a comprehensive structured literature review was conducted. According to the results of this study, there are three main categories of HEPP financing studies in the literature, namely, financing channels and products, factors that complicate financing and financing- risk relationship of HEPP projects. According to these findings, which criteria most affecting HEPP financing and which financing channel is the most suitable are determined.Research limitations/implicationsAmong all financing channels, only direct debt sources are selected.Practical implicationsThis study is structured as a simple lender selection guide for HEPP investments. Selection criteria are applicable for both lenders and investors. For lenders, those criteria are expected to improve loan performance and optimize financial product selection. For investors, those criteria are expected to help choosing suitable products and improve revenues.Social implicationsThis study will contribute the researchers those intended to work on the topic.Originality/valueThis study will contribute to limited literature on HEPP financing. Project finance literature is limited and narrow even there is no study that investigates hydropower project finance sourcing. In this manner, this study can be considered as a pioneer.