Asian Development Bank (ADB) is considering investing in renewable energy is risky because this sector involves huge capital investment, there is no proper policies favoring renewable energy in many countries and above all the whole world is under recession. The bank is drafting a new policy taking these into consideration.
Experts from various banking people why it is considered as risky are:
- Clean energy technology is “experimental,” creating it financially risky as an investment.
- Many of the companies producing this technology are start-up and will have difficulty accessing credit because they don’t have a track record.
- These projects are “capital-intensive,” and risk is huge without certain profit even in the long term.
To make renewable energy competitive with the conventional energy by bringing down the price of technology, Republic Act 9513, or the Renewable Energy Act of 2008, provides fiscal and non-fiscal incentives for renewable energy investors, involving tax credits on domestic capital equipment and services, special tax rates on equipment and machinery, amidst others.