OECD workshop on blended finance guidance for clean energy, 7 April 2022, Paris, OECD

1. Costanza Strinati, Senior Analyst
7 April 2022
Blended finance for clean
energy projects

2. 2
Closing the financing gap for clean energy
Source: IEA (2021)
Blended finance remains key to attract private investors and close the
financing gap
+300%
under
SDS
+650%
under
NZE
Size of the gap

3. 3
dev con ops
POLITICAL
RISKS
Political and social risks X X X
Administrative risks X X
Policy / Regulatory risks X X X
TECHNICAL
RISKS
Construction delays and risks X
Upstream resources-related risks X X
Operation risks and other downstream output related risks X
COMMERCIAL
BARRIERS
Access to Capital X X X
Market-specific construction, financial, operation costs increase X X
Currency Risk X X
Counterparty / Off-taker / Credit Risk X
Revenues Attractiveness and Volatility X
OTHER
INVESTOR
BARRIERS
Investment Horizon / Liquidity X
Scale of Investment X X X
Lack of capacity at local level X X
Key risks and barriers for clean energy projects
Source: CPI (2018)

4. 4
dev con ops
POLITICAL
RISKS
Political and social risks X X X
Administrative risks X X
Policy / Regulatory risks X X X
TECHNICAL
RISKS
Construction delays and risks X
Upstream resources-related risks X X
Operation risks and other downstream output related risks X
COMMERCIAL
BARRIERS
Access to Capital X X X
Market-specific construction, financial, operation costs increase X X
Currency Risk X X
Counterparty / Off-taker / Credit Risk X
Revenues Attractiveness and Volatility X
OTHER
INVESTOR
BARRIERS
Investment Horizon / Liquidity X
Scale of Investment X X X
Lack of capacity at local level X X
Key risks and barriers for clean energy projects
Source: CPI (2018)

5. 5
Blended finance initiatives often do not tackle relevant barriers
and risks
Access to capital and information gaps were the primary barriers
addressed
Source: CPI (2018)

6. 6
Blended finance initiatives often do not tackle relevant barriers
and risks
While more
relevant barriers,
such as currency
and off-taker risk,
were less
frequently
addressed
Source: CPI (2018)

7. 7
Guarantee and insurance instruments are not used as often as
other instruments
Almost half of the
initiatives surveyed make
use of direct blended
finance instruments, such
as concessional debt,
concessional equity, or
grants
Source: CPI (2018)

8. 8
Guarantee and insurance instruments are not used as often as
other instruments
Almost half of the
initiatives surveyed make
use of direct blended
finance instruments, such
as concessional debt,
concessional equity, or
grants
The use of guarantees and insurance instruments was not as frequent
despite their demonstrated ability to effectively mobilize private
investment
Source: CPI (2018)

9. 9
Most initiatives are too small to attract institutional investors
Just over half of the initiatives surveyed are USD 100 million or less in
size.
Source: CPI (2018)

10. 10
Most initiatives are too small to attract institutional investors
Just over half of the initiatives surveyed are USD 100 million or less in
size.
Source: CPI (2018)
Institutional investors usually require ‘benchmark-size’ deals greater
than USD 300 million
37% of the
surveyed
initiatives

11. 11
Prioritize instruments that address the key risks to investors
Risk mitigation instruments such as guarantees,
insurance, and currency hedging
Liquidity-generating and aggregating instruments to
bring in new investor classes and recycle capital for new
investments on the ground
Early-stage risk financing for new projects, technologies,
and business models

12. 12
Target long term sustainability and scale
Develop and support intermediaries
They can bridge investors and pipeline, the public and private
sectors, and international and local institutions
Scale ideas that work
This can require different approaches from innovation
Streamline and mainstream
Reduce transaction costs, incorporate technical assistance,
train and maintain staff, align institutional incentives,
standardize designs and agreements

13. Contact –
CPI: climatepolicyinitiative.org
The Lab: climatefinancelab.org
Global Landscape of Climate Finance:
climatefinancelandscape.org
Thank You
@climatepolicy
@climatepolicyinitiative
USICEF: usicef.org
Costanza.Strinati@cpiglobal.org