Renewable energy public–private partnerships in developing countries: Determinants of private investment

In this research, we study, for the first time, the determinants of private investment participation in public–private partnership (PPPs) projects in renewable energies. We analyse a broad sample formed by 1,371 PPPs from 63 developing countries in the period 1997–2016. Using a Tobit estimation technique, our findings reveal that PPPs that are smaller, younger, where the private partner takes more responsibilities, and the prime revenue source comes from the electricity consumers' payments, show a greater degree of private investors' participation. In addition, better institutional and economic environments impact positively on the attractiveness of private investment. Other interesting findings are that the support of multilateral development banks (MDBs) positively affects the participation of private investors in renewable energy PPPs, and this becomes more important when the institutional and economic frameworks are weaker. The article sheds light for practitioners and policymakers on promoting actions that reinforce the determinants that positively affect private participation. In this way, government actions that promote the institutional financing of third parties, as well as improvements to their institutions and economic environment, enable efforts to be prioritised due to the positive impact it has on private participation. Similarly, good indicators of these factors allow private investors to select projects that will be more successful.