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Scaling finance for renewable energy

Could scaling finance models speed up the deployment of renewable energy? DNV GL’s recent Future of Spaceship Earth report found the transition from fossil fuels to clean energy will not be fast enough to meet the climate targets set out in the UN Sustainable Development Goals (SDGs) by 2030.

Our independent forecast model analysed key issues such as population, energy efficiency, energy use, emissions, and food availability. Goal 13: Climate action received red lights across the board. This means we will not achieve the goal in any world region without extraordinary action.

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Action on climate change is a global challenge: we succeed or fail as one planet. Lack of sufficient progress on climate action forms a barrier towards achieving most other global goals. It will be increasingly difficult to achieve most of the global goals in a world with increased climate change.

Access to finance remains a critical barrier to accelerating deployment of renewables. There’s a need to engage a broad range of investors to increase the pool and reduce the cost of capital.

Scaling finance for renewable energy

Last week, on Energy Day at COP22 in Morocco, the World Business Council for Sustainable Development (WBCSD) announced the release of ‘Pathways to scale finance for renewable energy’.

The report details five key themes raised through dialogues between the industry and investment community. These include the importance of engaging new investors to the sector, the potential of new financing vehicles and the unique challenges and opportunities of emerging markets.

The report highlights a number of key takeaways identified in the discussions on scaling finance, including:

  • The range of investor types active in renewable energy is growing, while there is a need to build and maintain the credibility of the sector;
  • New financing vehicles, such as green bonds, are a key opportunity to scale finance for renewables. Recent growth is promising and there is strong demand from investors;
  • A unique set of challenges and opportunities arises with developing and financing projects in emerging markets, where most future investment will be made. This shows that the role of multilateral development banks as a capital and risk intermediary is critical;
  • We need to overcome the perceived disconnect between capital availability and project availability. Mutual education, de-risking of projects and greater disclosure of forthcoming pipelines will be beneficial.

The report is part of WBCSD’s REscale business solution – designed to increase and accelerate the deployment of renewables. The REscale finance action plan brought together the renewable energy industry and the investment community in several meetings throughout 2016 to discuss and develop solutions to scale finance for renewable energy.

REscale consists of companies from different industries and markets. These include ABB, BT, DSM, CLP, CPFL Energia, DNV GL, EDF, EDP, Enel, Eskom, First Solar, Iberdrola, Nestlé, NRG, Schneider Electric, State Grid Corporation of China and Unilever. The International Finance Corporation and the Clean Energy Ministerial are REscale partners.

The report is available here.

 

This post originally appeared on Bjørn Kj. Haugland’s LinkedIn blog.

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