Blended Finance in Clean Energy: Experiences and Opportunities

The report identifies Sub-Saharan Africa, South Asia, and East Asia as high-impact regions for clean energy investment, with a subset of eight countries offering over USD 360bn in potential by 2030. It argues that while clean energy costs are falling, private investment is hindered by off-taker, currency, and policy risks. The authors recommend shifting blended finance from covering viability gaps to providing risk-mitigation instruments like guarantees and local currency hedging, and creating liquid, tradable assets through securitization to attract institutional investors.

• Sub-Saharan Africa, South Asia, and East Asia & Pacific are the regions with the most significant investment opportunities for both energy access and climate change mitigation. A subset of eight countries—India, South Africa, Mozambique, Cambodia, Mongolia, Uganda, Kenya, and Rwanda—offer more than USD 360bn in investment potential by 2030.
• India represents the largest single opportunity among the high-impact countries, accounting for 80% of the total renewable energy investment potential identified, with a market opportunity valued at USD 292bn.
• The primary risks and barriers preventing the scaling of private investment in clean energy within developing economies are off-taker risk, currency risk, policy risk, revenue attractiveness, liquidity risk, and mismatches in investment size and scale.
• There is a mismatch between the instruments most needed by investors and those currently offered by blended finance initiatives. Risk mitigation tools such as guarantees and insurance are less frequent than direct investments, and there are significant gaps in local currency financing and early-stage risk financing.
• Institutional investors, such as pension funds and life insurers, are under-represented in blended finance initiatives, participating in only 8% of the 75 initiatives surveyed, despite their massive assets under management.
• To attract institutional capital, blended finance should focus on aggregation into large fund vehicles and the creation of tradable, liquid assets through securitization, as these reduce overall risk and match institutional investor profiles.
• Blended finance needs to transition from covering the 'viability gap' between clean energy and fossil fuels toward addressing specific investment risks, particularly through guarantees, insurance, and local currency hedging.
• Early-stage risk financing is critically lacking for project preparation in mid- to large-scale projects (over 10 MW), distributed generation companies, and new technologies like energy storage.

APA

Tonkonogy, B., Brown, J., Micale, V., Wang, X., & Clark, A. (2018). Blended Finance in Clean Energy: Experiences and Opportunities. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/01/Blended-Finance-in-Clean-Energy-Experiences-and-Opportunities.pdf

Chicago

Tonkonogy, Bella, Jessica Brown, Valerio Micale, Xueying Wang, and Alex Clark. Blended Finance in Clean Energy: Experiences and Opportunities. Climate Policy Initiative, 2018. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/01/Blended-Finance-in-Clean-Energy-Experiences-and-Opportunities.pdf.

Wikipedia

{{cite report |last1=Tonkonogy |first1=Bella |last2=Brown |first2=Jessica |last3=Micale |first3=Valerio |last4=Wang |first4=Xueying |last5=Clark |first5=Alex |title=Blended Finance in Clean Energy: Experiences and Opportunities |publisher=Climate Policy Initiative |date=January 2018 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2018/01/Blended-Finance-in-Clean-Energy-Experiences-and-Opportunities.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{tonkonogy2018blended, author = {Tonkonogy, Bella and Brown, Jessica and Micale, Valerio and Wang, Xueying and Clark, Alex}, title = {{Blended Finance in Clean Energy: Experiences and Opportunities}}, institution = {Climate Policy Initiative}, year = {2018}, month = jan, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2018/01/Blended-Finance-in-Clean-Energy-Experiences-and-Opportunities.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }