Project Financing Renewable Energy Projects : Can the Clean Development Mechanism Improve the Bankability of Renewable Energy Projects in Developing Countries?

Project financing renewable energy projects in developing countries is a daunting task which is further limited by the geo-political, economic and regulatory risk present in the developing countries. Renewable Energy is affected by the intermittent seasonal supply which makes it a high risk activity. But, Renewable energy is the new dispensation in the world's energy mix. It has the potentials of meeting and surpassing the world's energy demand, generating a secure and long term sustainable energy supply and reducing local and global GHG emissions.There is few renewable energy technologies that can compete with conventional fuels in terms of costs even though Renewable Energy offers a solution to the global environmental problems associated with conventional fossil fuels, it is still more expensive.The major problem associated with development of renewable energy is the fact that it has been difficult raising finance for renewable energy projects mainly due to the risks associated with it. But, can CDM be the answer for renewable energy development in developing countries? Will it encourage the technology transfer that will lead to transfer of skills and knowledge that will result in the sustainable development goal of the Kyoto Protocol for project based mechanisms in developing countries? Furthermore, is it able to give investors the confidence to invest in developing countries?