Key Drivers of PPPs in Electricity Generation in Developing Countries : Cross-Country Evidence of Switching between PPP Investment in Fossil Fuel and Renewable-Based Generation
This paper presents new global evidence on the key determinants of public-private partnership investment in electricity generated by fossil fuels and renewable energy based on a panel data analysis for 105 developing countries over a period of 16 y...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2012/07/16462671/key-drivers-ppps-electricity-generation-developing-countries-cross-country-evidence-switching-between-ppp-investment-fossil-fuel-renewable-based-generation http://hdl.handle.net/10986/11938 |
| Summary: | This paper presents new global evidence
on the key determinants of public-private partnership
investment in electricity generated by fossil fuels and
renewable energy based on a panel data analysis for 105
developing countries over a period of 16 years from 1993 to
2008. It aims to identify the key factors affecting private
investors' decision to enter electricity generation,
through probit analysis, and the amount of investment sunk
in this market segment, based on Heckman's sample
selection analysis. The paper shows some evidence of
switching from investment in fossil fuels to investment in
hydro and renewables and within fossil fuels from oil to
natural gas. An interesting result of the econometric
analysis is that the likelihood of switching toward
renewable investment is driven by long-run environmental
factors, such as the increases in the price of oil and the
introduction of the Kyoto protocol. Another interesting
result is that sector governance support schemes, provided
by feed-in tariffs, affect only the entry in renewable based
electricity generation and have no impact in reducing the
amount of investment in fossil fuel based generation.
Economy-wide governance factors, including control for
corruption and degree of political competition, are factored
in by private investors only in the initial stage of the
game when the decision to enter into the generation market
is taken and not the amount of investment. This confirms
that the first generations of independent power producers
have been developed on the basis of long-term power purchase
agreements guaranteeing a fixed rate of return, through
take-or-pay clauses and/or government guarantees. |
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