Green banks emerge to support renewable energy projects

March 20, 2014 0 By Alicia Moore

Clean power is finding more support from the private sector thanks to green banks

Renewable Energy - Green BanksRenewable energy often hinges upon the financial support it can receive. Energy projects without sufficient financial support tend to stagnate and, eventually, cease to be. Governments around the world are becoming less inclined to invest in clean power because of the risky nature of these investments. As such, the energy sector is beginning to turn to the financial service space in order to find the support it needs from the private sector.

Governments turn to green banks in order to show support for innovative energy projects

While governments have been wary of showing support for risky energy projects, many have begun to support the emergence of so called “green banks.” These financial institutions are created by governments and exist to facilitate the private sector showing support for energy projects. Green banks are meant to supply the private sector with the tools it needs to make reasonable and intelligent investments in energy projects that are seeking financial backing.

Banks can incentivize private investors through the use of public funding

Green banks have the ability to leverage a certain amount of public funding in order to incentivize private investors to support renewable energy and clean technology. In doing so, green banks are able to accelerate the development of various types of energy projects. Currently, one of the most popular forms of clean energy that often wins the support of private investors through green banks is solar power.

Green banks may be able to accelerate the advancement of clean technologies

These green banks do not only exist to support energy projects, of course, as they also work to promote investments in the research and development of clean technologies. As these technologies become more advanced, they are also becoming less expensive, making energy projects more economically feasible and cost effective. Green banks are beginning to become quite common in countries that have an interest in renewable energy but have concerns regarding the massive upfront costs that are associated with widespread adoption. Through green banks, these countries are able to show support for new energy projects without exposing themselves to undue financial risks.