2.4 Financing Large-Scale Projects (Ch. 5)

Development and widespread implementation of carbon-reducing energy solutions at the level necessary to significantly reduce GHG emissions in the United States will require substantial capital investment. However, certain obstacles continue to hold back investment in carbon-reducing energy systems at utility-scale and consumer levels, including: (1) high up-front capital costs; (2) technology risk; (3) energy generation variability and integration costs; (4) tax incentive limitations; (5) location restrictions for consumer investors; (6) burdensome development and permitting time lines; and (7) inadequate transmission infrastructure. Policy changes at the federal, state, and local levels can be used to attract increased investment to carbon reducing energy solutions and create a dynamic clean energy economy while reducing negative impacts on the climate and environment. Some ways to overcome the challenges described above include: (1) tax incentives, carbon pricing, and financial innovation to reduce high up-front costs and attract a broader investor base; (2) financial protections to reduce risks associated with adopting new technology; (3) adaptable use of the electric grid to address energy generation variability; (4) virtual net metering and community solar to tap into investment from residential and commercial investors otherwise limited by the location and type of property they own or rent; (5) streamlined permitting processes to reduce risks associated with lengthy development time lines; and (6) investments in transmission infrastructure to best take advantage of lower no-carbon energy resources. The chapter provides an overview of the challenges to attracting capital to carbon-reducing energy projects and the corresponding pathways to overcome such challenges. These pathways will reduce investor risk and increase investor returns, paving the way for increased investment in the carbon-reducing energy systems that are essential to achieving the necessary levels of decarbonization.

LPDD Model Laws [2 model laws]
Climate Superfund [5 resources]
Green Banks [23 resources]
Loan Securitizations [3 resources]
Green Bonds [9 resources]
On-Bill Financing [9 resources]