14 January 2018 | Articles
Public investment flows
The public sector plays a critical role in establishing an enabling environment for investing in renewable energy through policies measures and programmes. This can improve the risk–return profiles of projects, thereby increasing the sector’s attractiveness to private investors.
Governments can mobilise private investment by investing public funds in renewables, notably via multilateral and bilateral development finance institutions, national funds and other national finance institutions such as green investment banks. These public financial mechanisms can help inject initial financing into a nascent sector or relatively new technologies, assume investment risks to increase confidence for private investors, and lower financing costs.
With the aim of providing transparent, authoritative and relevant information on public investment flows, IRENA has compiled comprehensive project-level data from public finance institutions. This database is updated and published annually as part of the Renewable energy statistics report.
Mobilising institutional capital for renewables
Institutional investors can play a crucial role in scaling up renewable energy investment. They include pension funds, insurance companies, endowments and sovereign wealth funds – together the largest potential source of private capital, managing over USD 90 trillion in total assets in developed countries alone. The OECD estimates that around USD 2.80 trillion per annum is potentially available from pension funds and insurance companies for new clean energy investment.
Although current institutional investment in renewable energy is far from potential levels, institutional investors are showing an increased level of interest, largely owing to the growing competitiveness of renewables, increasing availability of capital market instruments and concerns about the risk of stranded fossil fuel assets. Dedicated financial instruments and policy measures can target specific challenges and barriers institutional investors face in renewable energy investment and continue to strengthen and support this momentum.
In this context, IRENA’s forthcoming report, ‘Mobilising institutional investors to finance renewable energy’, will examine the landscape of, and trends in institutional investment in renewable energy
In this context, IRENA is conducting an in-depth study of institutional investors’ investment trends, their views of the renewable energy, as well as main drivers and barriers they face in this sector.
Financial instruments and funds registered on the Marketplace
The Marketplace enables project owners to access various financial instruments including debt, equity, mezzanine, grant, guarantee and other instruments provided by multiple investors. The registered investors range from development finance institutions, private companies, utilities, private equity funds, and donor and multi-donor facilities to commercial banks and more.