The Bank of England has made a recent cut in its interest levels to reach 1.5%. This is the lowest level it has ever set since it was founded in 1694. One way to think of the interest rate is that it tells you about the cost of capital. If you borrow capital today you would be expected to pay a rate proportional to the interest rate (depending on how you do your borrowing). The idea is to make capital cheap so people would borrow and start spending, and in the process getting the wheels of the economy to turn again.

Renewable energy projects are very capital intensive. You pay a lot of money upfront and then you sit back and reap the rewards as your plant generates electricity with minimum maintenance costs. So if the interest rates are low, and thus the debt service is cheap, wouldn’t this be a good time to start building some renewables?

The average bank is not really passing through the savings and thus it will be difficult for John Smith to remortgage his house (and that is especially difficult now with how the housing market is acting) and take the money and put up some wind turbines. But what happens if you have a major project to finance? Surely there must be a way to access large capital cheaply. With the world today calling for reduction in the carbon footprint, and with some politicians looking at the green industry to overturn the recession, would it be wise for the government to start some program through which the large project developers could take out loads of cash, and start building something? Or maybe even encourage some firms to take out lump sum cash amounts cheaply and then finance microrenewables at a small profit (in percentage terms).

The bottom line is, cash is cheap, renewables need cash, so someone should start building some renewables.