A renewable energy future is within our grasp: the technology is now widely available and cost-effective in most places around the world. But the current rates of deployment remain well below what is required to avert the worst impacts of climate change. The private sector is poised to invest billions of dollars to massively speed up, scale and support the energy transition. However, many investors, particularly in the private sector, are deterred by some of the risks related to renewable energy investments. As the energy transition is likely to be financed largely by the private sector, governments must work with the private sector to remove barriers and incentivize investment in renewable energy.
This working paper focuses on the challenges and solutions to scaling investment in renewable energy generation and provides actionable policy solutions to unlock the private sector investment needed to support the energy transition.
Key findings of the report include:
- The global transition to renewable energy is likely to be financed largely by the private sector, including utility companies, corporations, project developers, and various investment funds.
- One critical element of the energy transition will be decarbonization of the world’s electricity supply. The needed technology is developing rapidly and the scale of the requisite investment is manageable, but current rates of deployment remain well below what is required to avert the worst impacts of climate change.
- Challenges that inhibit decarbonization of the power sector fall into three categories: market structure that lacks appropriate incentives to catalyze private investment in new projects, lack of public support for siting renewable energy development, and incompatible or inadequate grid infrastructure.
- Governments will play a critical role in scaling renewable energy capacity by providing regulatory frameworks and policy solutions to the challenges that are slowing down private sector investment.
- Top priorities for governments will be to establish renewable energy targets, policies, and market instruments that incentivize and de-risk green energy investments; improve planning and permitting, and address community concerns, while balancing other concerns; and invest in modern electricity grids and infrastructure.
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