Abstract
Abstract
Decarbonizing the power sector is central to global climate mitigation, but the deployment of low carbon technologies highly depends on their cost of capital. Existing estimates of the risk-adjusted weighted average cost of capital (WACC) commonly base on country, market and technology conditions without resolving how risks accumulated during project development result in technology-specific financing premiums. Here we combine a multi-stage project development model with expert elicitation to translate stage-specific failure rates and development durations into equivalent risk-adjusted WACCs for 13 power generation technologies in China. We find that short-cycle technologies, including solar photovoltaics and onshore wind, have lower risk-adjusted WACCs of 6.2~6.6%. By contrast, the WACCs of large-scale high-risk technologies, including nuclear and thermal generation with carbon capture and storage, could reach 7.0~9.6%. The early-stage development success rate dominates such financing premiums. Applying the risk-adjusted WACC to 120 power transition pathways in China, we find project developers provide more than 90% of pre-construction investment and bear most of the risk exposure to development failure. These findings identify high-risk pre-construction capital as critical constraint for timely kicking-off of low-carbon technologies.