Something is brewing in the financial world. “Sustainable finance” and the growth of ESG funds have been taking the market by storm in recent years. Since most major PV projects end up needing investors from the capital market, it is only a matter of time before they will have to adapt. The beginning of March 2021 saw a milestone reached in this process.
Some 15% of the finance disbursed must fit the wider definition of being ‘sustainable’ and banks and other lenders have been warned penalties will be applied for non compliance.
Green bonds have experienced rapid growth since their inception in 2007, and participants in the solar energy industry stand to benefit. In 2019, issuers launched over US$250 billion in green bonds offerings, representing 51% growth year over year.
Looking at the various solar power plant mechanisms brought by regulatory changes in 2020, the Turkish PV market is aiming to adopt some exciting new financial and business models.
The world is watching to see whether signatories to the Paris Agreement can increase emission reduction targets to match the 1.5°C goal. While Covid-19 and oil shocks rock the markets and delay negotiations, if the financial community is given the correct information, tools and frameworks to shift its focus, the transition to a low carbon greener future may yet be assured. Felicia Jackson in London explores the implications of the EU’s Climate Law and the Green Deal that it promotes.
From playing a key role in facilitating the scaling of the solar sector, to opening new markets and enabling grid and energy storage technologies, multilateral financial institutions have been an important part of the ongoing global energy transition. And as Felicia Jackson writes from London, with the expansion of “green banks” and clean-energy lending, the role of these institutions is only set to expand.
Although decried for lacking ambition and as an abdication of responsibility in some quarters, the climate law proposed by the European Commission may be more ambitious than it first appears, as Felicia Jackson, from the center for sustainable finance of the School of Oriental and African Studies at the University of London – considers here.
In every corner of the globe, markets are experiencing an increasing need for capital to back renewable energy assets. Apart from conventional loans, bonds and equity schemes, Shariah-compliant financing instruments, such as Sukuk, serve as a catalyst for funding PV projects, Deloitte finds.