Renewable energy finance: Sovereign guarantees

Assurances against country-level risks are essential to make renewable energy investments bankable. Sovereign guarantees represent a government’s commitment to cover payments in case of default. Yet with this well-known instrument becoming harder to obtain, lesser-known risk mitigation alternatives can also be viable.

This brief from the International Renewable Energy Agency (IRENA) examines the options available for risk mitigation on projects to scale up renewables. It focuses specifically on issues in less-developed countries, where investments may require additional safeguards.

An immense shift is needed in the allocation of financial capital to drive the world’s transition to a low-carbon economy. IRENA has produced concise briefs on key investment vehicles and new business models for renewable energy finance.

Other briefs in the series to date:

• Institutional capital
• Green bonds