Public-Private Partnerships for clean energy investment in developing and emerging economies: Allocating risks and sharing rewards

Clean energy investment such as geothermal and hydropower projects tend to be large, capital intensive and with long repayment periods. These projects are challenging, especially in developing and emerging market countries that are in transition and sometimes characterized by a changing and unpredictable political situation and unfavorable business environments. Public- Private Partnerships (PPPs) enable pooling of public, private and donor funds for clean energy investment in developing and emerging market economies. Those economies are also eligible for support from international financial institutions (IFIs) such as the World Bank Group and regional development banks(1). A well designed PPP can be a venue for scaling up funding for clean energy internationally and thus contribute to the battle against climate change. The focus of this article is on PPPs; potential benefits and challenges for host governments and various partners (including the private sector, bilateral donors, multilateral institutions), allocation of risks as well as sharing of rewards. When disputes occur between the private sector and host governments International Financial Institutions can play an important role in resolving disputes and help ensure the fair sharing of the risks and the rewards of the PPP for all the parties involved