{"id":10274,"date":"2018-04-18T13:52:11","date_gmt":"2018-04-18T13:52:11","guid":{"rendered":"https:\/\/climatepolicyinitiative.org\/?p=10274"},"modified":"2026-04-24T16:45:01","modified_gmt":"2026-04-24T16:45:01","slug":"blending-finance-for-risk-mitigation","status":"publish","type":"post","link":"https:\/\/www.climatepolicyinitiative.org\/pt-br\/blending-finance-for-risk-mitigation\/","title":{"rendered":"Blending finance for risk mitigation"},"content":{"rendered":"

Within developing economies, there are significant opportunities to increase investment in clean energy, however, risk remains a key barrier to climate investment. Blended finance is a critical tool to help nations meet their climate commitments, while also addressing the risks and barriers faced by investors when pursuing these opportunities<\/strong>.<\/p>\n

In one of CPI\u2019s early publications on risk \u2013 the 2013 Risk Gaps series<\/a> – we highlighted how risk can prevent renewable energy projects from finding financial investors by jeopardizing their potential returns. At the time, investors in both developed and developing countries were demanding coverage for policy risk (such as retroactive changes to feed-in-tariff in Spain<\/a>), while financing risks in developing markets were being driven by immature financial institutions, and not sufficiently addressed by financial instruments.<\/p>\n

Today – five years later – even though clean energy costs have come down significantly, risks and barriers are still preventing investment in developing countries.<\/p>\n

Our recent publication, \u201cBlended Finance in Clean Energy: Experiences and Opportunities\u201d<\/a> looks at potential markets for high-impact investment opportunities requiring blended finance support – India, South Africa, Mozambique, Cambodia, Mongolia, Uganda, Kenya, and Rwanda – and identifies key barriers to investment using macro-indicators that best define specific risks in the region. Our analysis also evaluates blended finance initiatives in clean energy, diving in-depth into a subset of them, to understand how barriers are currently being addressed and to identity any remaining gaps.<\/p>\n

Key barriers and risks in high-impact countries<\/strong><\/p>\n

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Note: (*) indicates that in the absence of a quantitative figure to estimate the barrier or risk, the intensity has been qualitatively determined by combining expert judgement with performance of other risks within the same country. N\/A indicates data not available<\/h6>\n

The main takeaway from our research is that, given the steep declines in clean energy costs, the public sector, when implementing blended finance initiatives, needs to shift its focus from covering the \u201cviability gap\u201d between clean energy and competing fossil fuel technologies, to a focus on targeted investment risks and barriers<\/strong>. Our analysis revealed that off-taker risk, currency risk, policy risk, and liquidity and scale risks are still relevant as early stage projects and clean energy companies face barriers in accessing financing. This has important implications for which financial instruments to deploy looking forward \u2013 with risk mitigation instruments, such as guarantees, insurance, and local currency hedging and financing, playing a key role.<\/p>\n

More specifically, our research found that:<\/p>\n