Financing Renewable Energy and Fossil Fuel Power Plants in Bangladesh: A Comparative Analysis

Renewable energy power plant project developers face a different set of investment risks compared to fossil fuel based power plants. These risks arise from the structure of the investment environment, which has been traditionally designed to support the fossil fuel power plant sector. However, it is important to now incentivize renewable energy electricity generation, as fossil fuels are becoming increasingly costly relative to renewables. This research explores how renewable energy plant investors perceive the extent of investment risks compared to fossil fuel plant investors. It has been found that risk perceptions vary between the two, and also varies between private sector investors and public sector investors. Renewable investments have an overall advantage in operations and maintenance risk, project development risk and regulatory risk. Moreover, coal plant investors can face more risks than renewable power plants, while public investors face fewer risks overall. With the right policy support, a level playing field can be created for renewable energy investors, to increase the share of renewables in the energy mix and avert the rising cost of electricity due to rising fossil fuel prices.