Title: Investment in Renewable Energy
Name: Manas Milind Deshmukh
1. The Importance of Supporting Investment In Renewable Energy
The critical role of investments in renewable energy in achieving environmental
sustainability, economic growth, and job creation within the European Union (EU). The
authors highlight the EU’s ambition to become the first climate-neutral continent by 2050, a
goal supported by policies such as the European Green Deal and the Renewable Energy
Directive.
• EU Energy Policy & Climate Goals: The EU has set ambitious targets for reducing greenhouse gas emissions by 40%, increasing renewable energy consumption to 32%, and improving energy efficiency by 32.5% by 2030.
• Economic & Employment Impact: Renewable energy contributes significantly to job creation, with over 10.3 million jobs globally in 2017. Projections suggest that
employment in the renewable sector could increase significantly by 2030 under various energy transition scenarios.
• Investment Trends (2015-2020): The European Investment Bank (EIB) has played a crucial role in financing renewable energy projects, allocating over €35 billion to energy projects, with a growing share directed toward renewables.
• Country-Specific Investments: Italy, Spain, and France received the highest energy investment funds, with Portugal and France leading in renewable energy allocation.
• Challenges & Recommendations: The transition to renewable energy requires significant technological advancements, infrastructure investments, and well
designed support schemes to minimize costs for consumers and maximize sustainability. (Irina-Elena Chirtoc et al,2020)
2. Enabling Foreign Direct Investment in the Renewable Energy Sector Reducing Regulatory
This World Bank and Energy Charter Secretariat report explores the role of foreign direct investment (FDI) in renewable energy and the challenges posed by regulatory risks and investor-state conflicts. It underscores how FDI is crucial for meeting global energy demand, bridging financing gaps, and supporting the transition to sustainable energy.
• Investment Need: Global electricity demand will double by 2050, requiring $1.3 trillion annually by 2030.
• FDI’s Role: Foreign investors fund 70% of renewable projects in developing nations, with $2.9 trillion invested (2013–2021).
• Challenges: Regulatory risks, policy changes, and contract revisions have led to 119 investor-state disputes in solar, wind, and hydro projects.
• Solutions: Governments should ensure policy stability and legal protections, while investors can adopt risk mitigation strategies like insurance and arbitration. (World Bank Group et al,2023)
3. Strategic Investment in Renewable Energy: A Top-Down Approach
This paper presents a top-down strategy for renewable energy investment, focusing on market analysis, sector evaluation, and financial optimization.
• Investment Challenges: Policy uncertainty, high upfront costs, and technological integration issues.
• Three-Step Framework:
1. Global Market Analysis – Identifying attractive investment regions.
2. Sector Analysis – Evaluating opportunities in solar, wind, hydro, and biomass.
3. Investment Vehicles – Selecting profitable financial instruments (stocks,
bonds, ETFs, etc.).
• Optimization Models: Includes wind, solar, hydro, and biomass energy calculations,
Levelized Cost of Energy (LCE), Net Present Cost (NPC), and Payback Period (PBP) analysis. (Peyman Ahmadian et al,2016)
4. Impact of Environmental Policies on Renewable Energy Investment in BRICS
This study examines how strict environmental policies (EPS) influence renewable energy investment in BRICS nations. Given their high CO₂ emissions and growing energy demand,
BRICS countries are under pressure to implement green policies while balancing economic growth.
• Strict environmental regulations can drive investment in renewable energy by promoting green technology and discouraging polluting industries.
• BRICS nations have significantly increased renewable energy investments, with China and India leading in funding.
• Challenges include high costs, policy inconsistencies, and the need for better regulatory frameworks.
• The study uses nonlinear panel QARDL analysis to assess short- and long-term impacts of EPS on renewable energy investment. (Naif Alsagr, 2023)
5. Catalysing Renewable Energy Investment in Developing Countries
This study explores strategies to mobilize investment in renewable energy in developing
nations, emphasizing the role of public support in attracting private sector participation.
• Investment Shift: Renewable energy investment has shifted from developed to developing countries, surpassing developed nations in 2015.
• Barriers: High costs, policy uncertainty, lack of infrastructure, and financing challenges hinder private sector participation.
• Public Support Mechanisms:
o Early-stage funding (e.g., UNEP’s Seed Capital Assistance Facility) helps
developers secure private investment.
o Guarantees & incentives (e.g., GET FiT Uganda, ARECA) mitigate financial
risks and encourage private financing.
• Recommendations: Enhancing private sector capacity, providing financial consultation, and improving regulatory environments can boost investments.
(MOON Jin-Young et al,2016)
6. Renewable Energy Investment Under Carbon Emission Regulations
This study explores the impact of carbon emission regulations on renewable energy investment and coal-based electricity generation.
• Carbon quotas influence the balance between renewable and traditional energy sources.
• Higher carbon constraints push energy suppliers toward renewable investments to maintain profitability.
• Emergency costs of coal electricity impact the profitability of mixed energy strategies.
• Optimal renewable energy investment depends on carbon quotas and market demand uncertainty. (Yuan Yuan et al,2020)
7. Public Satisfaction with Media Coverage of Renewable Energy Investments
This study examines how well media coverage informs citizens about renewable energy investments, focusing on Greek citizens’ satisfaction levels.
• Citizens are dissatisfied with media information, especially regarding subsidies and policy changes in renewable energy investments.
• Lack of clear and simplified information may discourage potential investors from participating in renewable energy projects.
• Media tends to focus on general benefits of renewable energy rather than practical investment details.
• Improved collaboration between journalists, experts, and policymakers could enhance media coverage and support informed decision-making. (Evangelia
Karasmanaki et al,2023)
8. Does Technological Innovation Drive Renewable Energy Investment?
This study investigates the two-way relationship between technological innovation (TI) and renewable energy investment (REI) in China from 2010 to 2022 using a rolling-window Granger causality test.
• TI can promote REI by reducing risks and improving efficiency in renewable energy.
• However, TI can also hinder REI by increasing demand for cheaper and more stable non-renewable energy.
• REI positively influences TI by boosting R&D in renewable energy, but it may also divert funds from other technological fields.
• The relationship is time-varying, meaning policy changes and market conditions significantly impact investment decisions. (Qian Zhao et al,2024)
9. Carbon Pricing, Border Adjustment, and Renewable Energy Investment: A Network Approach
This paper analyzes the macroeconomic and emissions effects of carbon pricing within the EU, using a multi-sector, multi-country model incorporating an energy block that accounts for renewable energy investment.
• A €100 per tonne increase in the EU carbon price reduces emissions by 24% but slightly lowers GDP (-0.4%) due to higher energy costs.
• Ignoring renewable energy investment overestimates the economic loss from carbon pricing.
• The Carbon Border Adjustment Mechanism (CBAM) reduces carbon leakage but raises costs for key industrial sectors, leading to additional economic losses.
• Renewable energy investment mitigates electricity price hikes and supports long term emission reductions. (Mar Delgado-Téllez et al,2025)
10. Competition vs Cooperation: Renewable Energy Investment under Cap-and-Trade Mechanisms
This paper examines how different cap-and-trade mechanisms impact renewable energy investment in competitive and cooperative electricity markets. The study compares two types of cap-and-trade policies:
1. Grandfathering Mechanism (GM) – Allocates carbon quotas based on historical emissions.
2. Benchmarking Mechanism (BM) – Allocates carbon quotas based on industry standards.
• Utility firms invest more in renewable energy under BM than GM, as BM provides stronger incentives.
• Competitive markets encourage higher investment in renewable energy than cooperative markets.
• BM leads to higher electricity production and lower electricity prices compared to GM.
• While BM supports renewable energy expansion, GM is more effective in reducing total carbon emissions.
• Governments should balance these mechanisms based on policy goals: BM for investment growth, GM for emission reduction. (Wei Chen et al, 2022)
Summary of Summary
Investing in renewable energy is crucial for achieving sustainability, economic growth, and job creation, particularly in the EU, which aims for climate neutrality by 2050 (Chirtoc et al., 2020). Global electricity demand is expected to double by 2050, requiring significant foreign direct investment, but regulatory risks remain a challenge (World Bank Group, 2023). Strategic investment frameworks help overcome barriers like policy uncertainty and high costs (Ahmadian et al., 2016), while environmental regulations in BRICS nations drive renewable energy adoption despite challenges (Alsagr, 2023). Developing countries have surpassed developed ones in renewable investment, with public support mechanisms playing a key role (MOON Jin-Young et al., 2016). Carbon pricing policies and emission regulations incentivize renewable investments but can impact traditional energy profitability (Yuan Yuan et al., 2020). However, poor media coverage limits public awareness and investment participation (Karasmanaki et al., 2023). Technological innovation enhances renewable energy efficiency but can also shift focus to non-renewables depending on market conditions (Qian Zhao et al., 2024). Within the EU, a €100 carbon price hike reduces
emissions by 24% but slightly impacts GDP, with renewable investment mitigating economic losses (Delgado-Téllez et al., 2025). Cap-and-trade mechanisms further influence investment, with benchmarking systems encouraging higher renewables adoption than grandfathering schemes, particularly in competitive markets (Wei Chen et al., 2022). Overall, a combination of stable policies, financial incentives, and technological advancements is necessary to drive renewable energy growth worldwide.
References:
Irina-Elena Chirtoc, Gabriela Bușan Romania Nicolae Economy Series, Issue 5/2020 ACADEMICA
BRÂNCUŞI” PUBLISHER, ISSN 2344 – 3685/ISSN-L 1844 – 7007
Mar Delgado-Téllez, Javier Quintana, Daniel Santabárbara ECB Working Paper Series No 3020
Enabling Foreign Direct Investment in the Renewable Energy Sector: Reducing Regulatory Risks and
Preventing Investor-State Conflicts © 2023 The World Bank Group and the Energy Charter Secretariat
ISBN 978-905948-246-3 (pdf)
International Journal of Management and Sustainability 2023 Vol. 12, No. 3, pp. 435-447 ISSN(e):
2306-0662 ISSN(p): 2306-9856 DOI: 10.18488/11.v12i3.3476
Ahmadian, Peyman and Jalilzadeh, Afshin 2 January 2016 Online
at https://mpra.ub.uni-muenchen.de/73681/ MPRA Paper No. 73681, posted 13 Sep 2016 04:09 UTC
MOON Jin-Young SONG Jihei Seojin LEE Researcher, June 28, 2016 Vol. 6 No. 17 ISSN 2233-9140
Yuan Yuan, Feng Cai, and Lingling, School of Energy and Safety, Anhui University
of Science and Technology, Huainan 232001, China; Received: 4 July 2020; Accepted: 21 August
2020; Published: 24 August 2020 Sustainability 2020, 12, 6879; doi:10.3390/su1217687
Evangelia Karasmanaki 1, , Evangelos Grigoroudis , Spyridon Galatsidas , and GeorgiosTsantopoulos
Citation: Karasmanaki, E.; Grigoroudis, E.; Galatsidas, S.; Tsantopoulos, G. Satisfaction with Media
Information about Renewable Energy Investments. Sustainability 2023, 15, 11480. https://doi.org/
10.3390/su151511480 Published: 25 July 2023
Qian Zhao ,Chi-WeiSu ,and Jun-MoGuo, SAGE Open January-March 2024: 1–18 The Author(s) 2024
DOI: 10.1177/21582440241227760 journals.sagepub.com/home/sgo
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