Sources of Investment

Public Investment Flows

The public sector plays a critical role in setting up 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.

In addition to that, 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 purpose 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.

 

Unlocking renewable energy investment to institutional investors

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 status of institutional investment in renewable energy is far from its potential, institutional investors are showing an increased level of interest. This is largely driven by 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 upcoming report “Mobilizing institutional investors to finance renewable energy” will examine the landscape of and trends in institutional investment in renewable energy by collecting and analyzing data, identify key barriers they face in renewable energy investment and suggest recommendations for policy makers, financial market players and institutional investors. 

Publication link (Upcoming)

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Financial instruments and funds registered on the Marketplace

The Marketplace enables project owners to access various financial instruments including debt, equity, mezzanine, grant, guarantee, or other financial instruments provided by multiple investors. The registered investors range from development finance institutions, private companies, utilities, private equity funds, donor and multi-donor facilities, to commercial banks and more. 


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