Finance
The clean energy policy resources—reports, data, and tools—that are provided here encompass deployment programs, financial incentives and regulations.
Incentive/Instrument
Governments, utilities, development banks, green banks and the private sector have several tools at their disposal that can help address barriers to clean energy investments. Incentives are policies that reduce the capital expenditures for an investment and in some cases can also help reduce the cost of financing. Instruments are financial structures and agreements that provide financial products or contractual agreements that provide cash flows.
- Asset-backed Securities
- Capital Subsidies, Grants and Rebates
- Clean Energy Funds
- Concessional Loans
- Credit Enhancement and Insurance
- Direct Public Investment
- Feed-in Tariffs
- Finance for Energy Access
- Green Banks
- Loan Guarantees
- Microfinance
- Net Metering and Net Billing
- Performance Based Incentives (PBI)
- Performance Contracting and Energy Service Companies
- Power Purchase Agreements
- Public/Utility Benefit Fund
- Tax Incentives
- Tenders and Reverse Auctions
- Tradable Certificates
- Yieldcos
Investor
Investors include those who can provide cash, can purchase stocks or bonds, or can loan to clean energy projects. Investors have their own appetite for risk and preference for types of projects, investment lengths and return rates. Accordingly, investors may focus on specific technologies and applications, markets, and stages of the business development cycle.
- Corporate
- Crowd/Social Funding
- Development Banks
- Government
- Guarantor/Insurer
- Industrial End Users
- Institutional
- Private Equity
- Private Sector Lenders
- Residential
- Small and Medium Enterprises
- Tax Investors
- Utilities
Investment
Each type of capital maps to different investor classes and may come with specific stipulations. For example, equity investments imply ownership. Clean energy companies, project developers and direct investors will likely use a portfolio of different types of content, depending on the stage of development the project or company is in and considering the overall cost of capital.
- Angel
- Balance Sheet
- Bond
- Climate Finance
- Equity
- Lease or Service Contract
- Loan
- Mezzanine
- Public Market
- Tax Equity
Barriers
Despite being widely deployed in a variety of markets and being considered as proven and commercialized technologies, clean energy projects and companies may face challenges accessing investment and finance owing to systemic risks and a lack of experience through the project development and financing process. Public and private sector incentives and instruments and other efforts, such as capacity building programs and the policy and regulatory environment are potential solutions.
- Access to Capital
- Fossil Fuel Subsidies
- High Upfront Costs
- Lack of Existing Market
- Low Knowledge Capacity
- Need for Public Funds Management
- Split Incentives
Market Stage
The level of market activity and size of the ecosystem of local technologies supplier, developers, financiers and investors can impact risks and thus the types of incentives and instruments needed to support project development. Nascent markets are likely to require stronger policy signals and programs that address higher risks and resulting cost of capital, whereas mature markets with significant project pipelines are less reliant on public sector programs.
Economy
Economic development can affect the overall financing and investment ecosystem. There are also often general correlations between stage of economic growth and the number and degree that barriers exist. Policymakers will need to consider the economic profile of their jurisdiction when designing incentives and instruments.
Jurisdiction
Policymakers, utilities and development banks focus on specific geographic areas, including at the regional level, at the country level or at the municipal or county/provincial level. Certain incentives and instruments may make more sense for a given jurisdiction.
See Also
Resources CESC
Publication
Climate action and the energy transition: IRENA Member survey on Nationally Determined Contributions
Sources:
International Renewable Energy Agency
Date:
1 June 2024
Publication
Sub-Saharan Africa: Policies and finance for renewable energy deployment
Sources:
International Renewable Energy Agency
Date:
1 July 2024
Publication
Clean Energy Market Monitor
Sources:
International Energy Agency
Date:
1 March 2024
Publication
Fostering Effective Energy Transition 2023
Sources:
World Economic Forum
Date:
28 June 2023
Publication
Cost-Benefit Analysis for Energy Efficient Refrigerators and Freezers in Uganda
Sources:
Lawrence Berkeley National Laboratory
Date:
1 March 2022
Tools and Websites
Levelised Cost of Electricity Calculator
Sources:
Nuclear Energy Agency
Tools and Websites
Energy Saving Trust (Website)
Sources:
Energy Saving Trust
Tools and Websites
Innovation in Isolation: Islands and the Energy Transition
Sources:
Kleinmnan Center for Energy Policy
Date:
1 December 2020
Tools and Websites
A Canadian Approach to Innovative Financing for Sustainable Development
Sources:
Government of Canada
Date:
10 October 2020
Publication
Mexico Clean Energy Report - Executive Summary
Sources:
National Renewable Energy Laboratory
Date:
1 April 2022
Tools and Websites
Energy Program: Sri Lanka
Sources:
United States Agency for International Development
Date:
1 November 2021
Tools and Websites
Green Credit Lines for SMEs in Guatemala: Supporting a Commercial Bank to Develop their Green and SME Financing Strategy
Sources:
BASE
Publication
Scaling Up Private Finance for Clean Energy in Emerging and Developing Technologies
Sources:
International Finance Corporation
Date:
1 June 2023
Publication
U.S. Solar Photovoltaic System and Energy Storage Cost Benchmarks, With Minimum Sustainable Price Analysis: Q1 2022
Sources:
National Renewable Energy Laboratory
Date:
1 September 2022
Publication
Manufacturing the Energy Revolution Australia’s Position in the Global Race for Sustainable Manufacturing
Sources:
The Australia Institute
Date:
1 August 2023
Publication
Powering Canada’s Journey to Net-Zero: CanREA’s 2050 Vision
Sources:
Canadian Renewable Energy Association
Date:
1 January 2021
Publication
Clean Energy Finance Corporation Annual Report 2021-22
Sources:
Clean Energy Finance Corporation
Date:
1 September 2022
Tools and Websites
Green Energy Finance
Sources:
Nature Sustainability
Date:
1 October 2022