Financial Resources for the Investments in Renewable Self-Consumption in a Circular Economy Framework

Abstract

The availability of financial resources has been pointed out as one of the determining factors for the investment in renewable self-consumption solutions for the energy transition in the European Union. In economic terms, the barriers to investment are related to low levels of profitability and difficulties in accessing financing in some European regions. These barriers must be overcome to foster a sustainable energy transition. However, this topic of analysis is still underexplored in the literature to date. This study provides a characterisation of the financial resources applied to self-consumption from an economic–financial approach to the decision-making investors in a case study in Spain from a novel focus on the subject. The relevance of alternative financial resources as a mechanism to reduce existing barriers is revealed through the analysis of the active role that installers play in making investment decisions, facilitating the growth of self-consumption. The alternative financial channels and the bank intermediation for renewables are topics of interest to promote the energy transition towards a low-carbon economy.

How does the circular economy achieve social change? Assessment in terms of sustainable development goals

“…However, several previous studies have highlighted the fact that the lack of financial resources hinders the implementation of CE in different types of investments (Aranda-Usón et al, 2018;Aranda-Usón et al, 2019) and that, therefore, specific public funding can favor its implementation in different organizations (Llera-Sastresa et al, 2020;Scarpellini et al, 2021).…”

Financing-Related Drivers and Barriers for Circular Economy Business: Developing a Conceptual Model from a Field Study

“…Company size SMEs find it more difficult to obtain financing for CE [4,19,[29][30][31][32][33][34][35] SMEs are more sensitive to extra costs [19,30] For SMEs, it is more difficult for them to obtain collateral for bank financing [19,33,34] SMEs often have no time and/or knowhow to apply for financing [29] High upfront investment costs High upfront investments (e.g., for technology, process implementations, innovation activities) are uncertain and sizable [2-4, 17, 24, 30, 36-42] Lock-in for linear processes requires drastic changes and therefore sizable investments [2,36] Circular business models' capital funding CEBMs are seen as capital-intensive, with long payback times and unfamiliar risks [2,17,19,29,43] PaaS, as an example, demands large amounts of working capital [43] The role of public financial support Public financial incentives are crucial in the CE transition [2, 3, 11, 17, 30, 33-35, 38, 41, 44-46] Investments which are otherwise not profitable can be made feasible with public support [2,42,46] Taxation requires changes to accommodate transition to CE [10,18,47] Current valuation and profitability of circular business models Traditional financiers, in particular, do not trust the value of CE business and require a precedent of profitability and risks [3,5,15,…”

“…Large enterprises, small-and medium-sized companies, and start-ups need to begin implementing circular business models (CEBM) and create economic value from resource-and energy-efficient solutions that are recyclable, reusable, or last longer or ones that exploit waste, possibly via the product-service system (PSS) offering product-as-service (PaaS), instead of selling "take-make-waste" products in the way that is typical in linear business models [12][13][14]. Simultaneously, these business models are required to be developed to be more attractive for end-users than linear products [15]; for example, with superior digital customer experience and other advancements in technology, it is assumed that this shift needs support from financing. The recent taxonomy initiative by the EU [16] acknowledges that in the future, companies' financing is determined by their CE orientation.…”

“…Only a handful of studies have so far focused on CE financing. Among these, Ozili studied the risks and rewards that CE financing can offer for financial institutions [5] and how central bank digital currency can affect transition to CE [18], Aranda-Usón et al [11] examined the characteristics of the financial resources invested in circular activities in companies, Scarpellini et al [15] investigated the kind of financial resources that are available for renewable self-consumption investments, and Ghisetti and Montresor [19] studied if and how CE practices applied by small-and medium-sized enterprises (SMEs) correlate with the financing decisions they make. Although these studies examine some financial aspects of CE business, they have not yet built a comprehensive understanding of financing-related factors shaping it.…”

Directions of Monitoring the Financial Activity of Agricultural Enterprises

“…Qualitative financial analysis involves study of relative and absolute indicators of financial stability of an enterprise in current economic realities, solvency of this organisation, liquidity of its products, and an assessment of the structure of assets and quality of accounting reporting (Ding, 2020). Methodology for assessing real financial condition of an agricultural enterprise involves forecasting financial indicators expected in the long and short term, and developing theoretical and practical recommendations for increasing the financial stability of the organisation, to increase the indicators of product liquidity and increase the overall solvency of the enterprise (Scarpellini et al, 2021;Bulavinova et al, 2021;Lehenchuk et al, 2021).…”