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Energy is a unique global commodity. Even with incessant calls for energy conservation, the demand for energy continues to rise. The demand for energy is expected to grow by 50% in the next 20 years. With limited fossil fuels, and concerns regarding pollution, renewable energy alternatives are being sought and pursued with ever increasing earnestness. To ensure that the production and use of renewable energies becomes widespread, the governments of many countries are passing legislation mandating it. Many governments are also providing incentives in the form of grants for anywhere between one-third and one-half of the cost of renewable energy power plants. These grants alter the risk to benefit ratio in the favor of investors. Instead of having to finance an entire power plant, investment capital would only be needed to cover between one-half or two-thirds of its cost, thereby limiting the financial risk considerably.
Preferential treatment is another important incentive which heavily favors the profitablilty of renewable energy producers. |