Risk Mitigation for Renewables
How Effective Risk Mitigation contributes to energy access and transition to cleaner energy
Scaling energy in emerging markets is constrained by a lack of bankable projects that can attract private capital. Investors face elevated risks—from political instability and foreign exchange volatility to weak off‑taker creditworthiness—driving up the cost of capital and creating financing gaps that public resources alone cannot fill. Effective risk‑mitigation , including the use of financial instruments such as guarantees, credit enhancements, blended finance, and foreign exchange solutions, are therefore critical enablers of the energy transition.
How Effective Risk Mitigation contributes to development
In the energy sector, access to affordable and reliable power underpins income generation, job creation, and economic inclusion. By rebalancing the risk‑return profile of clean energy projects, effective risk‑mitigation tools enable investments that would otherwise deter private capital. ESMAP has developed a targeted suite of initiatives and instruments to help unlock private investment in renewable energy across the world’s most underserved markets.
Effective Risk Mitigation’s main challenges and solutions
Effective risk mitigation instruments can catalyze entire energy markets, build investor confidence, lower tariffs for consumers, and create conditions for sustained private sector engagement. ESMAP’s Sustainable Renewables Risk Mitigation Initiative partnership supports countries in building pipelines of bankable renewable energy projects by addressing critical risks, unlocking private investment, and maximizing socioeconomic benefits.
How to Unlock Pipelines of Bankable Renewable Energy Projects in Developing Countries?
Effective risk mitigation instruments can catalyze entire energy markets, build investor confidence, lower tariffs for consumers, and create conditions for sustained private sector engagement. ESMAP’s Sustainable Renewables Risk Mitigation Initiative partnership supports countries in building pipelines of bankable renewable energy projects by addressing critical risks, unlocking private investment, and maximizing socioeconomic benefits.
Program
Sustainable Renewables Risk Mitigation Initiative (SRMI)
ESMAP’s SRMI supports robust planning for grid expansion and energy storage, the competitive tendering of renewable energy projects, and the structuring of innovative financial instruments to improve the bankability of projects and attract private investment.
Designing and implementing renewable energy auctions is complex. A 2024 training explained the relevant tools and knowledge to help run such a process successfully. The initiative aims to enhance power procurement capabilities to pave the way for greater private sector involvement.
Practitioner Voices
SRMI’s comprehensive and integrated approach to support governments, design, and procure bankable renewable energy projects with adequate risk mitigation instruments is critical to the private sector.
Result Stories
From Fossil Fuel Reliance to Renewable Ambition: How Tunisia and Burkina Faso Are Shaping Africa’s Clean Energy Future
Meet the Leaders and the Knowledge Platform Empowering Africa’s Energy Transition
Across the African continent, the energy transition is underway. For decades, countries have depended on imported fossil fuels to power their economies, expensive and polluting energy sources that leave them vulnerable to market shocks and instability.
World Bank Approves Investments to Boost Indonesia’s Economic Growth and Access to Clean Energy
The World Bank approved two significant investments for a total blended finance package of US$2.128 billion to create jobs, boost economic growth and improve clean energy access across Indonesia.