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Clean Energy Innovation Investment Ecosystem: New Financial Intermediaries in Clean Energy

Catalyzing private capital for energy innovation is one of key issues confronting the transition to a low-carbon economy. Today, early-stage clean energy projects and companies face severe funding shortages to commercialize their technologies and enter the energy market. While consistent and long-term sources of investment capital are needed to flourish innovation and entrepreneurship in clean energy, current financial intermediaries have failed to effectively channel sources of funding to entrepreneurs. Investment opportunities (and risks) are not assigned to the appropriate investors due to governance challenges such as ineffective intermediation, misaligned incentives and information asymmetry among different investor categories and companies.

SFI’s research on “Clean Energy Innovation Investment Ecosystem” proposes new ideas to mobilize investment capital to support energy innovation by designing new financial intermediaries. These new financial intermediaries are tailored to the specific risks and opportunities associated with clean energy technology development. Our research projects uniquely focus on organizational and institutional barriers in the clean energy investment market, and consider new roles and functions of intermediation in the way to drive positive social and environmental impact alongside financial results. They will contribute to redirect finance towards sustainable investments, and to reshape the financial system to be compatible with a low-carbon economy.

Clean Energy Innovation Investment Ecosystem is a joint focus area of Stanford Global Projects Center and the Precourt Institute for Energy, and receives partial funding from Bank of America, the US Department of Energy and Activation Energy (partnering with the Lawrence Berkeley National Laboratory).

Research Focus Areas:

  • Organizational and institutional barriers that exist in the clean energy investment market
  • New roles and functions of financial intermediation in fostering the transition to a low-carbon economy
  • New investment vehicle to coordinate a broad range of investors in clean energy and to facilitate an intelligent information flow over the entire clean energy development cycle

People:

Publications:

Project in Progress:

  • In, S.Y. and A. Monk “Drivers of Successful Exit: Experience from the Early-Stage Hard-Tech Energy Investment in the US Market” (in collaboration with the US Department of Energy and Activation Energy)