Mobilising low-cost institutional investment in renewable energy

The report identifies that institutional investment in renewable energy is constrained by illiquidity, fund size, and a lack of internal expertise, limiting potential direct investment to less than 1% of total assets under management. To address this, the authors propose the Clean Energy Investment Trust (CEIT), a pooled, listed, and low-fee vehicle designed for liability-hedging. The report argues that a CEIT could increase potential institutional investment from $305 billion to nearly $4 trillion, significantly lowering the cost of capital for renewables. Initial core investors are expected to be large public-sector pension funds, with smaller institutions joining as the market matures.

• Direct institutional investment potential in renewable energy projects remained largely stagnant between 2010 and 2013, representing less than 1% of total OECD institutional assets under management in both periods.
• The primary barriers preventing institutional investment in renewable energy include asset illiquidity, the high cost of maintaining internal direct investment teams (fund size), and a lack of internal resources for due diligence.
• The proposed Clean Energy Investment Trust (CEIT) could expand the potential for institutional investment in renewable energy assets from $305 billion to nearly $4 trillion, a thirteen-fold increase.
• To attract institutional investors, the CEIT must be designed as a yield-focused, low-fee, publicly tradeable, closed-end vehicle that serves as a liability-hedging instrument similar to investment-grade corporate bonds.
• Large public-sector pension funds with experience in real assets are identified as the most likely initial core investors for CEITs, while smaller institutions will likely enter the market only after it matures.
• In the United States, the development of a CEIT market could potentially reduce the cost of electricity for wind by 15-17%, making new wind generation cheaper than operating an additional 30.5GW of mostly coal plants.

APA

Huxham, M., Varadarajan, U., O’Connell, B., & Nelson, D. (2017). Mobilising low-cost institutional investment in renewable energy. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2017/08/August-2017-CPI-Energy-Finance-CEIT-Barriers-report-final.pdf

Chicago

Huxham, Matthew, Uday Varadarajan, Brian O’Connell, and David Nelson. Mobilising low-cost institutional investment in renewable energy. Climate Policy Initiative, 2017. https://www.climatepolicyinitiative.org/wp-content/uploads/2017/08/August-2017-CPI-Energy-Finance-CEIT-Barriers-report-final.pdf.

Wikipedia

{{cite report |last1=Huxham |first1=Matthew |last2=Varadarajan |first2=Uday |last3=O’Connell |first3=Brian |last4=Nelson |first4=David |title=Mobilising low-cost institutional investment in renewable energy |publisher=Climate Policy Initiative |date=August 2017 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2017/08/August-2017-CPI-Energy-Finance-CEIT-Barriers-report-final.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{huxham2017mobilising, author = {Huxham, Matthew and Varadarajan, Uday and O’Connell, Brian and Nelson, David}, title = {{Mobilising low-cost institutional investment in renewable energy}}, institution = {Climate Policy Initiative}, year = {2017}, month = aug, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2017/08/August-2017-CPI-Energy-Finance-CEIT-Barriers-report-final.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }