The International Renewable Energy Agency (IRENA) and the Terrawatt Initiative are leading the Solar Energy Standardisation Initiative. The initiative aims to help spur development of solar projects throughout the world by simplifying the process of going solar. Specifically the initiative will focus on standardizing contracts that will help streamline the financing process of solar projects and speed their development.
“This initiative aims to create a common industry language across all the assets, contracts or markets that are needed to develop renewable energy projects,” explained Jean-Pascal Pham-Ba, secretary general of the Terrawatt Initiative. “This will help quickly increase investment to the levels required to achieve global sustainable development and climate goals.”
Standardizing such contracts internationally will help countries, banks and other financiers, as well as project developers bring projects to fruition. Given that already IRENA is projecting that the commitments countries made to reduce climate change are expected to reach $1.2 trillion by 2030 reducing necessary paperwork and speeding development can help greatly reduce the cost of solar projects.
But streamlining the financing costs of solar projects across the world is difficult since 176 countries in the world each have their own regulations for energy development, some may not even have regulations in place for solar power yet. That says nothing of local or regional regulations within those countries, which can further impact the costs and paybacks of a solar project.
“High transaction costs for some solar projects are due, in large part, to the complexity of the contractual documents supporting the projects,” said Henning Wuester, director of IRENA’s Knowledge, Policy and Finance Centre. “Simplifying the negotiation of these contractual documents will help reduce transaction costs, and allow investment in solar PV to advance more rapidly in more markets worldwide. That is what this initiative hopes to achieve.”
The Terrawatt Initiative was launched at the Paris Climate Talks (COP21) to promote solar power as a means to meet the world’s energy needs while promoting sustainable development and addressing climate change issues. Reducing the red tape and soft costs around solar development is one of the chief ways in which it will accomplish its goals.Tweet