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Blended finance

Strengthening conditions to attract finance and investment in clean energy

Strengthening conditions to attract finance and investment in clean energy

Our work on blended finance

Meeting the Paris Agreement goals will need a rapid acceleration of finance towards clean energy investments in emerging and developing economies. Blended finance – the strategic use of development finance for the mobilisation of additional finance towards sustainable development in developing countries – is an important tool that can help mobilise commercial investment towards clean energy, whilst preserving scarce public resources for wider climate and development objectives.

OECD blended finance guidance for clean energy

A systematic approach to the deployment of blended finance – that tailors instruments to the nature of underlying barriers to commercial investment, minimises concessionality, has a clear exit strategy, and is co-ordinated within a wider ecosystem of support and enabling measures – can help maximise its development impact and stimulate private sector development. This paper explores specific features of clean energy projects, and the wider transition, to draw lessons for donors, policymakers in beneficiary governments, and financial institutions on whether and how best to deploy blended finance in the sector. It revisits the OECD DAC's Blended Finance Principles, specifically Principle 2: designing blended finance to increase the mobilisation of commercial finance, and explores their applicability to clean energy. It also explores sector-specific considerations for the deployment of clean energy, setting out the considerations development practitioners can make to inform better decision-making on, and maximise the development impact of, blended finance interventions.

Blended finance case studies

The paper includes case studies provided by development practitioners. The case studies demonstrate real-world appreciation of some of the considerations outlined in the guidance. they can be accessed in the table below: 

 

Project Country/Region Sector

Pro Mini-Grids Programme - Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ)

Uganda Off-grid clean energy
Energy Efficiency and Conservation Project - Japan International Cooperation Agency (JICA) Bangladesh Energy efficiency
Regional Energy Efficiency Programme (REEP) - European Bank for Reconstruction and Developmment Western Balkans Energy efficiency
Energy Savings Insurance Program - Inter-American Development Bank Colombia Energy efficiency
Green Project Bond in Benban Solar Park - Scatec, MIGA and EBRD Egypt Utility-scale renewables
Mobilising Insitutional Capital Through Listed Product Structures (MOBILST), ThomasLloyd Energy Impact Trust - UK Foreign, Commonwealth & Development Office Global Utility-scale renewables

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OECD Blended Finance Principles

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Events, workshops and publications