192. Information asymmetries refer to the unequal and/or insufficient access to information regarding a given transaction, where one party has more or better information than the other. There are significant market failures in the RE market, and, in particular, significant levels of information asymmetry between RE project developers and potential financiers. The reasons for information asymmetries in RE development include:
• The innovative nature of RE technologies and lack of operational history/reliable performance data. There is a lack of actuarial information for the renewable energy sector (e.g. loss history) that is necessary for accurate resource assessment and risk evaluation ;
• Multi-year investment horizons, coupled with high upfront costs and long payback periods ;
• Reliance on (unstable) public resources and subsidies to make investment financially viable.
193. As many RE projects tend to be small-scale, undercapitalized projects developed by little - known sponsors, the information required by lenders and underwriters to assess a project's viability is often missing or expensive to provide (involving high transaction costs). Risks are thus difficult to quantify and financial conditions for investment become more restrictive (credit requirements, contract terms and conditions, structure and documentation).