Financial Barriers to Development of Renewable and Green Energy Projects in Asia | Asian Development Bank

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Financial Barriers to Development of Renewable and Green Energy Projects in Asia

Publication | August 2018
Financial Barriers to Development of Renewable and Green Energy Projects in Asia

Reluctance to finance renewable energy projects has been a major barrier to green energy expansion in Asia.

The expansion of green renewable energy has been very limited in all the Asian countries. The contributing factors are numerous, but finances have been the single major factor determining whether a country opts for such energy. This is notwithstanding awareness about the unsustainability of fossil energy-dominated energy mixes, both for environmental and economic reasons. The main culprit is Asia’s bank-dominated financial system with its underdeveloped capital market, which leaves Asian banks as the major source of funding for green renewable energy projects. Reluctance to finance these projects, because they are seen as very risky with a low rate of return, has been the major barrier to the expansion of green renewable energy in Asia. Addressing the financing challenge is both possible and necessary to remove the barrier to green energy expansion in Asia.

WORKING PAPER NO: 862