DIFC can play a key role for financing renewable energy

“With a large number of financial institutions, DIFC can facilitate funding for a range of small and large-scale renewable energy projects as well as venture capital for start-ups,” Dr Saidi said at an economics workshop, which discussed key risks and challenges in financing renewable energy projects in the Middle East and North Africa (MENA) region.

The event titled ‘Financing Renewable Energy Projects’, was held in partnership with the International Project Finance Association (IPFA), with participation from Masdar.

“The strong regulatory framework and vast pool of financial expertise available within the DIFC enables it to be a key facilitator for financing renewable energy projects. DIFC provides the institutional infrastructure necessary for establishing a full-fledged carbon credit exchange. The Dubai Mercantile Exchange (DME) based in DIFC has the potential to develop itself into the leading centre for trading carbon credits, east of Europe,” Dr Saidi said.

“Access to affordable energy is critical to economic progress, especially in the context of emerging and developing economies. Today, nearly 1.6 billion people globally have no regular access to reliable energy services. One of the biggest hurdles to the growth of renewable energy projects is financing, particularly as the infrastructure, materials and technologies involved in these projects require large upfront costs. Governments will also need to provide regulatory and financial incentives for increased consumption and production of renewable energy, as well as phase out subsidies for petroleum based energy production.”

The UAE has taken the lead in investing in mega-scale renewable energy projects particularly with the creation of projects such as Masdar and IRENA’s (International Renewable Energy Agency) decision to move its headquarters to Abu Dhabi.

In 2009, the Middle East region invested a total of $1.67 billion in clean energy projects, a clear rise from the total of $745 million invested in 2007. However, in light of the global credit crunch, there is a clear need to explore alternate sources of funding as well create a sound legal framework to support renewable energy financing in order to maintain a leadership position in this fast-evolving sector,” he said.

—abdulbasit@khaleejtimes.com