Development Finance Institutions (DFIs) utilize various financial instruments to support energy storage and renewable energy projects. While specific instruments used for energy storage may not be explicitly detailed, DFIs generally employ:
- Concessional Financing: This is often critical for early-stage energy storage operations, providing cheaper funding that can be more affordable for fledgling projects.
- Guarantees: DFIs can offer guarantees to reduce risk for investors and increase the viability of energy storage projects. These guarantees can take the form of first-loss guarantees or credit enhancements.
- Debt Instruments: DFIs rely heavily on debt financing for their projects, which could be applicable to energy storage initiatives, particularly senior debt, subordinated debt, and concessional loans.
- Risk-Sharing Facilities: These facilities allow DFIs to share risks with private investors, making projects more attractive to them.
- Grants: While not as common as debt instruments, grants can also be used, especially for initial feasibility studies or smaller projects.
- Technical Assistance: Beyond financial instruments, DFIs offer technical assistance and capacity building, which can support the development of energy storage projects by improving their feasibility and attractiveness to investors.
While these instruments are not exclusively for energy storage, they are versatile enough to be applied to such projects as part of broader renewable energy initiatives.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-specific-financial-instruments-do-dfis-use-for-energy-storage-projects/
