5 Main Sources of Renewable Energy Financing

• A sound renewable energy policy can help make financing for these projects easier to get
• Renewable energy financing can be found from many sectors, including private investors, banks, and government programs
• Green certificates can help raise money for renewable energy financing as well

Renewable energy financing is an important aspect to moving away from fossil fuels, because the infrastructure, materials, and technologies needed require a large initial investment for energy that costs less over times, is domestically produced, and is stable. Financing these projects can be done in many ways, from green certificates and tax credits to a renewable energy policy in the country that includes low interest loans and grants. All these options will allow individuals and companies to make the switch and move towards alternative renewable energy sources. Without financing, this change will be impossible for a big portion of the country, and of the world.

1. Private Investment

Renewable energy financing can be found in the form of private investment options. These can include private individuals and companies that invest their capital into alternative energy projects that they believe in. These projects can be large, small, or any size in between. Private investment can offer nice returns for the investor as long as the project is successful when it is built, and the alternative energy project gets the much needed funding to start construction and operation. Private investment can be a common source of funding for renewable energy projects, especially when funds are not available using other financing methods. The credit freeze in the last couple of years has made conventional loans difficult to get, but private investors still recognize the tremendous opportunity that alternative energy can offer.

2. Government Programs

Government programs and a renewable energy policy can play a big part in renewable energy financing. Government programs can offer low or no interest loans to these alternative energy projects, to help create the needed infrastructure to start using a majority of alternative renewable energy sources instead of fossil fuel energy sources. The stimulus bill passed by President Barack Obama includes money for financing more renewable energy projects. This will allow the United States to build and repair an infrastructure that works with alternative energy sources. The government is also working on changes to the renewable energy policy, making it a bigger priority so that the country is no longer as dependent on foreign countries and fossil fuels to meet the energy needs of the population.

3. Tax Credits

Tax credits can be a source of renewable energy financing, especially when these credits are given for performing certain actions, such as installing solar panels or windmills to generate electricity. For businesses, tax credits may be in the form of no taxes for a specific number of years or a certain percentage of taxes offset, making this money available for investment into renewable energy projects instead. In the US there are tax credits in place for both individuals and businesses that choose to make the switch to alternative renewable energy sources, helping to lower the cost of energy projects that do not use fossil fuels.

4. Green Certificates

Green certificates are used by a number of countries, including the UK, and the money generated by these certificates is invested as renewable energy financing for new alternative energy projects. This system allows more of these facilities to be built each year, so that the amount of energy supplied by renewable sources will continually increase each year.

5. Bank Loans

Conventional bank loans have always been a renewable energy financing option, especially for successful businesses and homeowners. Thanks to the economic crisis around the world, this option has been restricted due to the reluctance of banks to lend money to anyone, including each other. This will probably not be true for long, because once the economy picks back up banks will once again become the most common source of renewable energy financing for most.

The information supplied in this article is not to be considered as medical advice and is for educational purposes only.