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Mapping Channels to Mobilise Institutional Investment in Sustainable Energy

image of Mapping Channels to Mobilise Institutional Investment in Sustainable Energy

What are the channels for investment in sustainable energy infrastructure by institutional investors (e.g. pension funds, insurance companies and sovereign wealth funds) and what factors influence investment decisions? What key policy levers and risk mitigants can governments use to facilitate these types of investments? What emerging channels (such as green bonds, YieldCos and direct project investment) hold significant promise for scaling up institutional investment?

This report develops a framework that classifies investments according to different types of financing instruments and investment funds, and highlights the risk mitigants and transaction enablers that intermediaries (such as public green investment banks and other public financial institutions) can use to mobilise institutionally held capital. This framework can also be used to identify where investments are or are not flowing, and focus attention on how governments can support the development of potentially promising investment channels and consider policy interventionsthat can make institutional investment in sustainable energy infrastructure more likely.

 

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The role of institutional investors in financing sustainable energy infrastructure

This chapter discusses the role of institutional investors in financing sustainable energy infrastructure. The chapter commences with a review of the rationale for investment in sustainable energy infrastructure and explores the financing needs and economic opportunities for the transition to sustainable energy provision. The chapter proceeds to highlight the strained financing capacity of governments, utilities and banks for sustainable energy project finance. Practical information is provided on the financial capabilities of institutional investors, as well as an examination of how their assets are allocated and their investment decisions are made internally. The barriers to institutional investment in sustainable energy are then explored. The chapter provides information on the state and trends of institutional investment in sustainable energy and emerging channels that hold significant promise for scaling up institutional investment, including green bonds, YieldCos and direct project investment.

English

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