Cost of Equity Capital and Additionality of Brazilian Renewable Energy Projects Under the Clean Development Mechanism |
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| Authors: | Felipe Lima Palha de Oliveira Celso Funcia Lemme |
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| Institution: | 1. McKinsey &2. Co. , S?o Paulo, Brazil;3. COPPEAD Graduate School of Business , Federal University of Rio de Janeiro , Rio de Janeiro, Brazil |
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| Abstract: | The purpose of this study was to assess additionality and the practice of estimating the cost of equity capital in 70 renewable energy projects in Brazil. Forty projects demonstrated additionality by means of financial analysis. No strong or clear relationships were found between project characteristics and the financial method used to demonstrate additionality. Among projects that used financial analysis, the evaluation often employed the risk-free rate. Failure to add any risk premium to projects of this nature suggests a certain analytical carelessness, perhaps induced by the innovative or experimental nature of these projects. |
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| Keywords: | additionality Clean Development Mechanism cost of equity capital Kyoto Protocol renewable energy projects |
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