Low-cost finance for the energy transition

The need to scale up the deployment of technologies such as green hydrogen, energy storage and offshore wind has become increasingly critical to the success of the global energy transition and to meeting global climate goals. To this end, access to low-cost capital for project financing in G20 Member Countries and beyond is vital. However, this remains challenging – particularly amid the current global tightening of monetary policies – given that a substantial portion of the necessary investment in energy transition technologies has yet to be sourced. This report, prepared by the International Renewable Energy Agency (IRENA) in close collaboration with the Ministry of New and Renewable Energy (MNRE) of India, aims to facilitate the discussion of this vital aspect of the transition under India’s G20 Presidency. The report offers lessons from historical cost reduction trends for solar PV and onshore wind technologies, enabling innovative frameworks that can adopted to accelerate the deployment of new and critical low-carbon technologies, and projected investment requirements for the global energy transition. The report also highlights the need to mobilise the resources of the private sector, given the limited resources of the public sector; active private sector engagement is vital, particularly in offering low-cost capital for financing energy transition projects. The catalysing role played by the public sector is also discussed in the context of the need for deeper public-private collaboration on the journey to a net-zero future. Finally, the report stresses the importance of developing a better understanding of the key drivers of the cost of capital for different technologies and markets.