Renewables Benefit From Cheaper Capital

The cost of capital for renewable electric utilities is slightly lower than for fossil fuel electric utilities, the Oxford Sustainable Finance Group has claimed. In a new report, it has found that globally, the cost of debt of renewable electric utilities is at 6%, compared to 6.7% for fossil fuel electric utilities – while the cost of equity is 15.2% for renewable utilities, compared to 16.4% for fossil fuel utilities. The report also claimed that globally, coal mining has the highest cost of capital, with the cost of debt increasing to 7.9% in 2021 and the cost of equity increasing to 18.2%. But, the US and Canada are bucking the trend, according to the report’s author Dr Gireesh Shrimali. “In North America, we don’t see a consistent trend in the cost of capital for renewables versus fossil fuel power,” he said. “What remains to be seen is whether the policy landscape can shift, particularly with big changes such as the recent Inflation Reduction Act.”  

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