Deloitte | Financing the Green Energy Transition

Deloitte | Financing the Green Energy Transition

Green projects currently suffer from underinvestment and high required return rates because private investors see green technologies as riskier than alternative investments. A key contributor to this risk perception is the political and regulatory risks that stem from governments’ failure to establish the necessary mechanisms and instruments that can guarantee attractive returns on investment. 

Developing economies, where about three-quarters of green investments should occur, often face greater risks and stricter public budget constraints for energy transition projects. Therefore, green projects, especially when they are in the Global South, are often not bankable, i.e., their risk-return profiles do not meet the investors’ criteria to mobilize sufficient capital. 

Finance for the Green Economy