Europe Corporate PPA big

/LONDON, May 9, 2023, 10:00 BST, IRENA, RENEWABLE MARKET WATCHTM/ The International Renewable Energy Agency (IRENA) published a new report, 'The Cost of Financing for Renewable Power'. Validated survey and interview results for the cost of capital of renewable power generation technologies were obtained for 45 countries on six continents. A total of 172 valid survey and interview responses were elicited from 56 experts through the survey and 33 experts in semi-structured interviews. The current cost of capital ranges from 1.1% to 12%.

The cost of capital is crucial for renewable energy projects, as it determines the profitability and feasibility of such investments. Renewable energy projects typically have high upfront costs, long payback periods, and uncertain cash flows, which make them more sensitive to the cost of capital than conventional energy sources. The cost of capital reflects the risk and return expectations of investors and lenders and the availability and accessibility of financing options. Therefore, reducing the cost of capital for renewable energy projects can help accelerate the transition to a low-carbon economy and mitigate the effects of climate change.

For this reason, slight differences in the cost of capital, which are not properly calculated, can reflect in wrong cost assumptions and may lead to poor results.

The responses provide the cost of capital data from 45 countries for at least one renewable energy technology and cover all major markets, while for many of the major markets, multiple responses by individual technology and country were received (e.g. there were seven responses for solar PV in Spain). To the best of the authors' knowledge, the geographical coverage of this database is the most comprehensive available for the cost of capital for renewable power generation technologies. The 45 countries represented in survey responses account for 88% of the new capacity added during 2020 in the case of solar PV, 98% of the new onshore wind capacity additions, and 87% of the new offshore wind capacity additions. The data collected relate predominantly to financing conditions in 2020/2021.


Chart 1: The cost of capital of utility-scale solar PV by country, 2019-2021; Source: IRENA

Disclaimer: This map is provided for illustration purposes only. Boundaries and names shown on this map do not imply the expression of any opinion on the part of IRENA concerning the status of any region, country, territory, city or area or of its authorities, or concerning the delimitation of frontiers or boundaries.

Note: WACC = weighted average cost of capital

The cost of capital values for 2020-2021 elicited in the survey ranged from a remarkable minimum of 1.1% for onshore wind in Germany to over 12% for solar PV and onshore wind in Ukraine. Other countries with a high cost of capital include Mexico, Egypt and Tunisia. For all renewable power technologies surveyed, Germany has the lowest financing cost (1.1% onshore, 1.4% solar PV, 2.4% offshore). Values for onshore peak at 12.2% in Ukraine, and for offshore at 8.1% in Viet Nam. Countries in Europe (besides Germany) with the lowest financing cost for utility-scale solar PV are the Netherlands (1.4%), Switzerland (1.7%), France (1.8%) and Belgium 1.9%).

The coverage of this survey is unprecedented in terms of its geographical and technological breadth; as such, the results may represent the most wide-ranging database on renewable energy financing available today.

IRENA Debt and Equity Contribution 2023

 Chart 2: Debt and equity contribution to the total weighted average cost of capital; Source: IRENA

The report fills a critical information gap by providing a greater understanding of the composition of the cost of capital and its drivers to assist policymakers in developing effective approaches to support the energy transition that reflect technology and country risks and help keep energy analysts/modellers seeking accurate cost estimates.

The survey results revealed that the cost of capital for a given technology varied, sometimes significantly, across respondents in individual markets. For solar PV in Spain, for instance, the cost of capital ranged from 36% below to 72% above the average, while for Italy, the range was from 43% below to 44% above. The cost of capital depends on the developer, offtake arrangements and other project-specific factors.

IRENA Expeted change in cost of capital 2023

 Chart 3: Expected average change in the cost of capital between 2019-2021 and 2025 by region and technology; Source: IRENA

In most regions, the cost of capital was expected to decline slightly or stay constant from 2019-2020 to 2025 in nominal terms, but this will depend on (among other things) the inflation situation in 2025. Experts anticipate the sharpest decline for offshore wind in the Asia-Pacific and solar PV in Europe and the Middle East, and Africa (all above 100 basis points).

The more information about the cost of financing for renewable energy, you may read here: IRENA - The Cost of Financing for Renewable Power - 2023

In addition to the report, you may download the associated DATA APPENDIX, which features the cost of capital data for solar PV, onshore and offshore wind for 100 countries, benchmarked from the survey data.

The more information about the European solar photovoltaic power market, including full contact details of renewable project owners and developers, you may read here: Europe Solar Photovoltaic (PV) Power Market Outlook 2023 ÷ 2032

To download the executive summary brochure with sample pages, please access from here: Europe Solar Photovoltaic (PV) Power Market Outlook 2023 ÷ 2032

For a better understanding of the benefits of using our reports, you may read here: Benefit List - Reports of Renewable Market Watch - 2023

 About Renewable Market Watch™

Renewable Market Watch™ is delivering strategic insight into emerging renewable energy markets through its experienced research team and cutting-edge predictive analytics data platform. We partner with our customers to provide research, data and consulting reports in areas appropriate to their specific requirements. The primary focus is emerging renewable energy markets of Asia Countries, Balkan countries, Central and Eastern Europe, CIS states (the former Soviet Union), LATAM countries, and MENA countries.  Our market reports are featured in reputable international media such as Bloomberg, Yahoo Finance and others. For more information about Renewable Market Watch™, please visit:

This website uses cookies to enhance your browsing experience.