Soaring inflation and interest rates, combined with supply chain issues and labour shortages, have pushed up the cost of capital and increased the costs needed to finance renewable projects. With the latest round of the Contracts for Difference (CfD) scheme set to open to applications this month many in the industry are concerned that the administrative strike price is set too low for projects to be financially viable given the rising capital costs.
This paper discusses the impacts of a high cost of capital on the success of both prospective and previously commissioned projects under the CfD scheme.
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