Project finance is playing an increasingly important role in meeting the growing demand for green and sustainable energy infrastructure.
As countries race to build out cleaner, more resilient power systems, investment is surging—and with it, a shift in how projects are funded. According to the International Energy Agency’s (IEA) latest World Energy Investment report, energy investment exceeded $3 trillion for the first time last year, with project finance emerging as a significant funding model.
At a global level, project finance plays a pivotal role in enabling the development of energy infrastructure, particularly in regions where public capital is limited. This is especially true for large-scale, capital-intensive renewable energy initiatives in developing countries, where structured finance mechanisms are mobilizing private investment.
Investment banks, along with private credit and equity, remain key backers of fossil-fuel investment. But the longer-term trajectory points toward a growing preference for clean energy, driven by policy incentives and evolving investor priorities. Of the $3 trillion in global energy investment in 2024, about $2 trillion was allocated to clean energy technologies—including renewables, grids, storage, nuclear and low-emissions fuels—and just over $1 trillion to fossil fuels, including coal, oil, and gas, the IEA reports.
To put these numbers in perspective, the ratio of clean energy to fossil fuel investment has shifted from 2:1 in 2015 to 10:1 in 2024 for power generation specifically. According to the latest available data, solar photovoltaic (PV) investment alone is projected to total $500 billion for 2024, surpassing all other electricity generation technologies combined.
China leads the way in clean energy spending at $680 billion, followed by the EU ($370 billion) and the US ($300 billion). Singapore-based Oversea-Chinese Banking Corporation (OCBC) is among the major banks supporting clients in the energy infrastructure space, collaborating with Chinese sponsors and engineering, procurement, and construction (EPC) contractors to develop and construct renewable projects in Southeast Asia: across generation, transmission, distribution, and storage infrastructure.
“Having committed to achieving net-zero emissions by 2050 for six priority sectors, including the power and oil and gas sector,” OCBC’s project finance team tells Global Finance, “a key focus for the bank has been to actively engage our clients in these sectors to support their net-zero transition. These include supporting our clients’ efforts in increasing the energy efficiency of new and existing plants and in scaling renewable energy development and deployment and relevant infrastructure.”
For example, OCBC China extended a one-year green loan of ¥220 million (about $30 million) to China’s Jiangsu Financial Leasing Co. The loan is being used for renewable-energy power generation projects in regions including Hebei, Guangxi, and Jiangsu.
“Markets such as Chile and Colombia have emerged as standout opportunities.”
Hugo Assunção, CFO, Perfin Infra
Targeted at energy conservation and emission and pollution reduction, these projects are also expected to improve regional water quality and optimize energy infrastructure.
“The green loan empowers Jiangsu Financial Leasing to incorporate environmental considerations in their business activities, putting the company on track to meet its sustainability commitments,” the OCBC team says.
Outside China, OCBC is supporting energy projects in Australia, Southeast Asia, and North Asia as well as the UK and US. Commonalities include clear pathways to energy security, not just within the renewables space but also for liquid natural gas as a transitional fuel. The bank recently committed to financing two projects in the UK, including a large-scale commercially viable carbon capture storage facility and a gas-fired power plant with carbon capture. The OCBC team says, “Our involvement in financing long-distance transmission lines in the UK also favorably positions us to contribute to the development of an ASEAN power grid, which is currently being contemplated.”
Curtailment Risk
While China has made progress through massive transmission infrastructure investment, curtailment risk—whereby renewable energy generation may be deliberately reduced or halted due to grid constraints, oversupply, or market inefficiencies—remains a concern in certain regions. This is especially the case in the wind-rich northern provinces, where transmission constraints have led to curtailment rates that sometimes exceed 20%.
Elsewhere, curtailment risk tends to be pronounced in regions of the world that are experiencing rapid renewable energy growth but lack sufficient transmission infrastructure.
Brazil is one such country. Fitch Ratings predicts that the volume of curtailed energy there could rise over the next few years due to the level of intermittent renewable generation in the country’s energy mix and the time needed to construct new transmission lines.
Brazil is working to address this. Total infrastructure investment in the country reached R$259 billion (about $46 billion) in 2024, a 15% increase from the previous year, with around 46% allocated to energy projects, according to the Associação Brasileira da Infraestrutura e Indústrias de Base.
“Brazil’s energy market has demonstrated consistent growth, underpinned by robust regulatory oversight,” says Hugo Assunção, CFO at São Paulo-based Perfin Infra. “However, it faces structural challenges, notably curtailment … to key demand centers in the southeast. To mitigate this, investments have increasingly focused on expanding transmission infrastructure.” Perfin Infra’s infrastructure assets under management in 2024 increased from R$9 billion to R$15 billion in 2024, driven primarily by strategic investments across the transmission, generation, highways, and sanitation sectors.
Across Latin America as a whole, capital deployment led by Brazilian investors has grown steadily, Assunção says, supported in part by favorable regulatory frameworks.
“Recently, markets such as Chile and Colombia have emerged as standout opportunities,” he adds, “particularly in renewable energy and sustainable infrastructure sectors.”
Despite a challenging macroeconomic environment, Assunção credits Brazil with solid momentum in capital markets appetite for well-designed infrastructure projects. “Brazil’s stable regulatory framework and the accelerating demand for clean energy have bolstered investor confidence,” he says.
Regulatory certainty remains a key factor in pushing renewables investment forward, along with policy support and streamlined permitting processes. These concerns have only gained prominence as the Trump administration’s recent actions demonstrate that regulatory uncertainty isn’t limited to emerging markets.
Policies impeding offshore wind and other renewable projects, which would have contributed substantial megawatt capacity to the system over the next decade, will create significant challenges for new-generation deployment across the US, says Marcia Hook, Energy Regulatory and Markets partner at Clifford Chance. Countries that maintain consistent investment in renewables without implementing obstructive regulations are most likely to gain competitive advantage, she argues.
“We don’t really see any other countries taking specific action against certain types of renewable projects,” says Hook.
Private-sector Funding
Crucial for private-sector investors trying to gauge their risk appetite are regulatory frameworks that include lender protections and foreclosure rights guarantees, while private equity investors closely evaluate how regulations might impact their exit opportunities and asset valuations.
That means private capital is focusing on jurisdictions with transparent, predictable regulatory environments and technologies with the strongest regulatory support.
Private illiquid funds “are increasingly displacing traditional banks as the primary source of financing, engaging from the early stages of project development, including the construction phase,” notes Perfin’s Assunção.
Perfin expects the tilt toward private capital for financing green and sustainable energy projects to persist through the end of this year, as projects aligned with the energy transition and emerging technologies—such as green hydrogen and energy storage—continue to attract significant investor interest.
“These sectors have been drawing increasing capital inflows,” Assunção says, “driven by their strategic importance and the rising global demand for sustainable solutions.”
