Financing clean power: a risk-based approach to choosing ownership models & policy/finance instruments

This working paper by the Climate Policy Initiative introduces a framework for allocating investment risks in clean power to minimize costs. It argues that rather than a binary choice between public and private finance, risks should be assigned to the party best equipped to manage them—whether private investors, public entities, or consumers—using a combination of ownership models and policy instruments.

• The document proposes a framework to determine the optimal allocation of power investment risks to minimize costs and identifies how a combination of policy/finance instruments and ownership models can achieve this.
• The authors argue that investment risks (such as construction or price risks) should be allocated based on who is best positioned to manage, understand, and bear them, rather than simply choosing between public or private finance.
• Assigning risks to private investors that they cannot effectively manage or understand, such as curtailment or policy risks, can lead to investments becoming unfinanceable or requiring a high cost of capital.
• Analysis of two case studies indicates that a strategic approach to risk allocation between the public and private sectors could reduce overall energy transition costs by 10-40%, specifically through the reallocation of price, offtake, curtailment, and development risks.

APA

Climate Policy Initiative (2017). Financing clean power: a risk-based approach to choosing ownership models & policy/finance instruments. https://www.climatepolicyinitiative.org/publication/financing-clean-power-risk-based-approach-choosing-ownership-models-policy-finance-instruments/

Chicago

Climate Policy Initiative. Financing clean power: a risk-based approach to choosing ownership models & policy/finance instruments. 2017. https://www.climatepolicyinitiative.org/publication/financing-clean-power-risk-based-approach-choosing-ownership-models-policy-finance-instruments/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Financing clean power: a risk-based approach to choosing ownership models & policy/finance instruments |date=3 September 2017 |url=https://www.climatepolicyinitiative.org/publication/financing-clean-power-risk-based-approach-choosing-ownership-models-policy-finance-instruments/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2017financing, author = {{Climate Policy Initiative}}, title = {{Financing clean power: a risk-based approach to choosing ownership models \& policy/finance instruments}}, institution = {Climate Policy Initiative}, year = {2017}, month = sep, url = {https://www.climatepolicyinitiative.org/publication/financing-clean-power-risk-based-approach-choosing-ownership-models-policy-finance-instruments/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }