Financing the Energy Transition: The New Paradigm for Renewable Energy Investors

The Paris Agreement, globally and the Green Deal, in EU have set up ambitious targets in terms of GHG emissions and climate neutrality of the economy for 2030 and 2050. The transformation of the energy sector, main emitter, will rely in the uptake and market deployment of innovative low carbon technologies such as renewable energy (RES). Access to finance to enable the energy transition is key to allow market penetration of innovative technologies. In addition, the concept of climate or sustainable finance opens the possibility to the setup of new financial models and schemes which account for the particularities of RES. This chapter showcases models of RES finance which have successfully been achieved and can be replicated. It focuses on new financial approaches and instruments, which are sufficiently innovative to leverage private investment into RES projects and to remove financial barriers (including public finance instruments). As such, the chapter provides an overview of the new paradigm emerging for investors in the field of climate finance. In particular, it highlights the financial characteristics of RE projects and the types of investors in such projects. It also underlines the role of donors and the need for public funding to close the financial gap in RE projects. Finally, this chapter also showcases the role of cities in financing RE projects.