Keys to Success of Renewable Energy Public-Private Partnerships for Positive Climate Action

What is it about?

Climate change is a major global concern. We need to shift to greener sources to produce more sustainable energy. One way to achieve this is through public-private partnerships, or PPPs. There has been an increase in the use of PPPs to construct and operate renewable electricity infrastructure projects. Indeed, private investments in such projects amounted to $27 billion in 2017. Knowledge of the associations between hypothetical failure factors and recorded failures can help to boost the gains from such projects. This study reviewed 1,769 high-cost PPPs in low- and middle-income countries with this objective. It explored the effects of the primary revenue stream, contract type, contract award method, and bid criteria on the failure rates of these projects.

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Photo by Matt Artz on Unsplash

Photo by Matt Artz on Unsplash

Why is it important?

This study shows that PPPs that use a purchase agreement as the primary revenue stream perform better than those that use other means of revenue generation. Greenfield PPPs perform better than expected, while Brownfield PPPs perform worse than expected. PPPs in which contracts are awarded via license schemes and direct negotiations meet expected performance levels. But those awarded via competitive bidding show high failure rates. This study suggests that risk allocation is critical. Higher risks taken by private partners may lead to high failure rates. This study supports the UN’s Sustainable Development Goal 7. This goal aims to increase energy access and the speed of transition to clean energy. Insights from this study can help public agencies identify suitable private contract types and revenue streams. These can help in successful private investment in such projects as well. KEY TAKEAWAY: The success or failure of PPP renewable electricity projects depends on multiple factors. A knowledge of these factors can help select and organize suitable projects and see to their success. This will boost the global supply of clean and green energy. This research relates to the following Sustainable Development Goals: • SDG 7: Affordable and Clean Energy • SDG 13: Climate Action • SDG 9: Industry, Innovation, and Infrastructure • SDG 17: Partnerships for the Goals • SDG 1: No Poverty