How do policies mobilize private finance for renewable energy?—A systematic review with an investor perspective

By F. Polzin, F. Egli, Bjarne Steffen, Tobias S. Schmidt. Applied Energy, 2019

347 citations recorded by the source corpus.

With the urgency of climate change, and billions spent globally on renewable energy (RE) support policies, it is crucial to understand which policies are effective. Substantial scholarly research on RE deployment policies has been carried out over the last two decades, resulting in inconclusive findings regarding the effectiveness of mobilizing private finance. Here, we take a novel perspective and review 96 empirical studies concerning the impact of policies on two key investor decision metrics: investment risk and investment return. Only if both metrics correspond to the investors’ expectations are they willing to engage in RE projects. First, our rigorous literature review shows that effective policies address risk and return simultaneously. Second, we find that generic instrument design features, such as credibility and predictability (continuous evaluation and monitoring), considerably impact investment risk. A more focused analysis of the specific design elements of feed-in tariffs, auctions and renewable portfolio standards reveals that these instruments are most effective when they are designed in such a way that they reduce RE project risk while increasing return. We distil important implications for policymakers who aim to foster renewable energy and clean technologies more broadly.

Subfields: Economics and Econometrics, Electrical and Electronic Engineering, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/6a24ce3da8662c766af9bdc2407e53e6a7d99416

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Citations in the corpus

How to finance energy renovation of residential buildings: Review of current and emerging financing instruments in the EU (2020, background): “These forms of support are usually included in policy mixes covering further fiscal and financial instruments such as feed-in tariffs and tax breaks (Polzin et al., 2019).”
Climate finance and disclosure for institutional investors: why transparency is not enough (2019, neutral): “Many investors may regard the past 30 years since IPCC was launched 6 as evidence that governments are in fact unlikely to take serious action to mitigate CO2 emissions, citing for example the repeated failure of many carbon pricing systems (including all Federal-led efforts under the Obama Administ”
An in-depth analysis of the evolution of the policy mix for the sustainable energy transition in China from 1981 to 2020 (2020, background): “Public policies play a crucial role in informing, directing and accelerating the energy transition [9,10].”