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Financing renewable energy: Who is financing what and why it matters

Mazzucato, M; Semieniuk, G; (2018) Financing renewable energy: Who is financing what and why it matters. Technological Forecasting and Social Change , 127 pp. 8-22. 10.1016/j.techfore.2017.05.021. Green open access

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Abstract

Successful financing of innovation in renewable energy (RE) requires a better understanding of the relationship between different types of finance and their willingness to invest in RE. We study the ‘direction’ of innovation that financial actors create. Focusing on the deployment phase of innovation, we use Bloomberg New Energy Finance (BNEF) data to construct a global dataset of RE asset finance flows from 2004 to 2014. We analyze the asset portfolios of different RE technologies financed by different financial actors according to their size, skew and level of risk. We use entropy-based indices to measure skew, and construct a heuristic index of risk that varies with the technology, time, and country of investment to measure risk. We start by comparing the behavior of private and public types of finance and then disaggregate further along 11 different financial actors (e.g. private banks, public banks, and utilities) and 11 types of RE technologies that are invested in (e.g. different kinds of power generation from solar radiation, wind or biomass). Financial actors vary considerably in the composition of their investment portfolio, creating directions towards particular technologies. Public financial actors invest in portfolios with higher risk technologies, also creating a direction; they also increased their share in total investment dramatically over time. We use these preliminary results to formulate new research questions about how finance affects the directionality of innovation, and the implications for RE policies.

Type: Article
Title: Financing renewable energy: Who is financing what and why it matters
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.techfore.2017.05.021
Publisher version: https://doi.org/10.1016/j.techfore.2017.05.021
Language: English
Additional information: Copyright © 2017 The Authors. Published by Elsevier Inc. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/BY-NC-ND/4.0/).
Keywords: Renewable energy finance, Financial actors, Portfolio approach, Direction of innovation, Deployment, Technology risk
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Inst for Innovation and Public Purpose
URI: https://discovery.ucl.ac.uk/id/eprint/10044043
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