Dr. Isabelle Laurent

International Journal of Economics and Management Intellectuals [IJEMI]

Green financing and investment: Drivers, barriers and outcomes in renewable energy projects

Author : Dr. Isabelle Laurent

Received: 02.09.2025 | Accepted: 18.09.2025 | Published: 03.10.2025

Open Access | Volume 2 Issue 5 | 2025 | Pages 44–53

How to Cite :

Laurent, I., "Green financing and investment: Drivers, barriers and outcomes in renewable energy projects", International Journal of Economics and Management Intellectuals [IJEMI], 2025, 2(5): pp. 44–53.

Abstract

The transition to renewable energy is a critical component of global efforts to mitigate climate change, yet financing sustainable energy projects remains a complex challenge. This paper examines the drivers, barriers, and outcomes associated with green financing and investment in renewable energy projects. Drawing on a mixed-method approach that combines primary insights from investors, banks, and project developers with secondary data from industry reports and project case studies, the study identifies key factors influencing investment decisions. Drivers such as government incentives, policy frameworks, and growing investor awareness facilitate capital inflow, whereas regulatory uncertainty, technological risk, and market volatility constrain investment potential. The analysis further evaluates outcomes, highlighting positive financial returns, increased renewable capacity, and environmental benefits such as carbon emission reduction. By integrating theoretical perspectives on sustainable finance with empirical evidence from renewable energy projects, the study provides actionable insights for policymakers, financial institutions, and project developers seeking to enhance investment efficiency and impact. The findings underscore the importance of cohesive policy support, innovative financing models, and strategic collaboration to accelerate renewable energy adoption.

Keywords

Green financing, Renewable energy investment, Investment drivers, Barriers to green finance, Sustainable development, Renewable energy projects, Policy implications, financial innovation, Risk management, Emerging economies

Conclusion

A. Summary of Key Findings

This study demonstrates that green financing plays a pivotal role in promoting renewable energy adoption, particularly in emerging economies. Key drivers include policy incentives, investor awareness, technological advancements, and market opportunities, which collectively create a favourable investment environment. Conversely, barriers such as regulatory uncertainty, high upfront costs, financial constraints, and operational risks hinder capital mobilization. The outcomes of green financing are multidimensional, encompassing environmental benefits, financial returns, economic development, and social improvements. Sector-specific analysis highlights differences in project viability, underscoring the need for tailored financing mechanisms across technologies.

B. Theoretical and Practical Contributions

From a theoretical perspective, the study integrates concepts from sustainable finance, investment theory, and renewable energy adoption, providing a framework linking drivers, barriers, and outcomes. It contributes to academic understanding by highlighting the interaction between policy, market mechanisms, and stakeholder behaviour in green financing. Practically, the research offers actionable insights for governments to design supportive policies, for financial institutions to develop innovative instruments, and for project developers to optimize strategy and risk management. By providing evidence-based recommendations, the study enables stakeholders to make informed decisions that enhance capital efficiency, project performance, and sustainability outcomes.

C. Limitations and Future Research Directions

While comprehensive, the study has limitations. It primarily focuses on Indian renewable energy projects, limiting generalizability to other contexts with different regulatory and market structures. Data constraints and reliance on interviews may introduce bias or partial perspectives. Future research could adopt quantitative modelling, cross-country comparisons, or longitudinal studies to assess the long-term impact of green financing on renewable energy adoption. Additionally, exploring innovative financing instruments, such as climate risk insurance or blockchain-enabled green bonds, could provide deeper insights into enhancing investment efficiency. Addressing these areas would further strengthen understanding of the complex interplay between finance, policy, and renewable energy deployment.

References

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Zhang, Y., & Wang, L. (2021). Green bonds and renewable energy projects: Financing pathways for sustainability. Energy Economics, 99, 105275. https://doi.org/10.1016/j.eneco.2021.105275
Li, X., Chen, H., & Zhou, P. (2020). Renewable energy investment and environmental governance: Evidence from China. Renewable and Sustainable Energy Reviews, 130, 109954. https://doi.org/10.1016/j.rser.2020.109954
Sharma, A., & Singh, P. (2021). Policy incentives and renewable energy financing in India: A sectoral analysis. Energy Policy, 151, 112164. https://doi.org/10.1016/j.enpol.2021.112164
Choudhury, T., & Sinha, R. (2021). Barriers to green investment: Insights from Indian renewable energy projects. International Journal of Energy Economics and Policy, 11(4), 320–332.
Huang, J., & Li, Z. (2022). Drivers of sustainable investment in renewable energy: A comparative study. Journal of Cleaner Production, 338, 130622. https://doi.org/10.1016/j.jclepro.2022.130622
Patel, K., Verma, S., & Sharma, R. (2020). Financing renewable energy projects: Risk, return, and policy perspectives. Energy Reports, 6, 1451–1463. https://doi.org/10.1016/j.egyr.2020.08.019
Zhou, X., & Li, H. (2022). Environmental, social, and financial outcomes of green financing: Evidence from Asia. Sustainable Finance and Investment, 12(2), 176–194. https://doi.org/10.1080/20430795.2022.2037146
Kumar, A., & Bansal, P. (2021). Investment behaviour in renewable energy: Challenges and opportunities in India. Energy Strategy Reviews, 38, 100756. https://doi.org/10.1016/j.esr.2021.100756
Singh, R., & Kaur, H. (2020). Innovative financing models for solar energy projects in emerging economies. Renewable Energy, 156, 1022–1031. https://doi.org/10.1016/j.renene.2020.04.034
Mehta, S., & Rao, P. (2021). ESG integration and green investment: Implications for renewable energy financing. Journal of Sustainable Finance, 9(3), 145–163.
Das, A., & Verma, N. (2022). Risk-sharing mechanisms in renewable energy investment: Public-private partnerships. Energy Policy, 167, 113066. https://doi.org/10.1016/j.enpol.2022.113066
Joshi, R., & Singh, V. (2020). Financial and operational challenges in biomass energy projects: An Indian perspective. Renewable Energy Focus, 33, 20–29.
Kapoor, P., & Sharma, M. (2021). Green bonds for renewable energy financing: Trends and performance evaluation. Sustainable Energy Technologies and Assessments, 46, 101200. https://doi.org/10.1016/j.seta.2021.101200
Reddy, K., & Suresh, M. (2022). Market opportunities and technological innovation in solar energy investment. Energy Economics, 108, 105888. https://doi.org/10.1016/j.eneco.2022.105888
Bhatia, R., & Gupta, S. (2020). Financial constraints and policy challenges in wind energy projects in India. Renewable Energy, 162, 1675–1685. https://doi.org/10.1016/j.renene.2020.08.092
Menon, A., & Raghavan, S. (2021). Socio-economic outcomes of renewable energy financing: Evidence from India. Sustainable Development, 29(5), 900–913. https://doi.org/10.1002/sd.2174
Iyer, S., & Nair, P. (2022). Comparative analysis of renewable energy sectors: Solar, wind, and biomass financing. Energy Reports, 8, 1120–1133. https://doi.org/10.1016/j.egyr.2022.04.045
Agarwal, V., & Chandra, K. (2021). Long-term impact of green finance on renewable energy adoption in emerging economies. International Journal of Energy Economics and Policy, 11(6), 421–433.
Sharma, P., & Verma, T. (2020). Barriers and enablers of green investment: Evidence from Indian renewable energy projects. Renewable Energy, 147, 2632–2643. https://doi.org/10.1016/j.renene.2019.10.102

[1] Kumar, S., & Patel, R. (2022). Green financing in emerging economies: Mechanisms and policy implications. Journal of Sustainable Finance and Investment, 12(3), 215–234. https://doi.org/10.1080/20430795.2022.2045167

[2] Zhang, Y., & Wang, L. (2021). Green bonds and renewable energy projects: Financing pathways for sustainability. Energy Economics, 99, 105275. https://doi.org/10.1016/j.eneco.2021.105275

[3] Li, X., Chen, H., & Zhou, P. (2020). Renewable energy investment and environmental governance: Evidence from China. Renewable and Sustainable Energy Reviews, 130, 109954. https://doi.org/10.1016/j.rser.2020.109954

[4] Sharma, A., & Singh, P. (2021). Policy incentives and renewable energy financing in India: A sectoral analysis. Energy Policy, 151, 112164. https://doi.org/10.1016/j.enpol.2021.112164

[5] Choudhury, T., & Sinha, R. (2021). Barriers to green investment: Insights from Indian renewable energy projects. International Journal of Energy Economics and Policy, 11(4), 320–332.

[6] Huang, J., & Li, Z. (2022). Drivers of sustainable investment in renewable energy: A comparative study. Journal of Cleaner Production, 338, 130622. https://doi.org/10.1016/j.jclepro.2022.130622

[7] Patel, K., Verma, S., & Sharma, R. (2020). Financing renewable energy projects: Risk, return, and policy perspectives. Energy Reports, 6, 1451–1463. https://doi.org/10.1016/j.egyr.2020.08.019

[8] Zhou, X., & Li, H. (2022). Environmental, social, and financial outcomes of green financing: Evidence from Asia. Sustainable Finance and Investment, 12(2), 176–194. https://doi.org/10.1080/20430795.2022.2037146

[9] Kumar, A., & Bansal, P. (2021). Investment behaviour in renewable energy: Challenges and opportunities in India. Energy Strategy Reviews, 38, 100756. https://doi.org/10.1016/j.esr.2021.100756

[10] Singh, R., & Kaur, H. (2020). Innovative financing models for solar energy projects in emerging economies. Renewable Energy, 156, 1022–1031. https://doi.org/10.1016/j.renene.2020.04.034

[11] Mehta, S., & Rao, P. (2021). ESG integration and green investment: Implications for renewable energy financing. Journal of Sustainable Finance, 9(3), 145–163.

[12] Das, A., & Verma, N. (2022). Risk-sharing mechanisms in renewable energy investment: Public-private partnerships. Energy Policy, 167, 113066. https://doi.org/10.1016/j.enpol.2022.113066

[13] Joshi, R., & Singh, V. (2020). Financial and operational challenges in biomass energy projects: An Indian perspective. Renewable Energy Focus, 33, 20–29.

[14] Kapoor, P., & Sharma, M. (2021). Green bonds for renewable energy financing: Trends and performance evaluation. Sustainable Energy Technologies and Assessments, 46, 101200. https://doi.org/10.1016/j.seta.2021.101200

[15] Reddy, K., & Suresh, M. (2022). Market opportunities and technological innovation in solar energy investment. Energy Economics, 108, 105888. https://doi.org/10.1016/j.eneco.2022.105888

[16] Bhatia, R., & Gupta, S. (2020). Financial constraints and policy challenges in wind energy projects in India. Renewable Energy, 162, 1675–1685. https://doi.org/10.1016/j.renene.2020.08.092

[17] Menon, A., & Raghavan, S. (2021). Socio-economic outcomes of renewable energy financing: Evidence from India. Sustainable Development, 29(5), 900–913. https://doi.org/10.1002/sd.2174

[18] Iyer, S., & Nair, P. (2022). Comparative analysis of renewable energy sectors: Solar, wind, and biomass financing. Energy Reports, 8, 1120–1133. https://doi.org/10.1016/j.egyr.2022.04.045

[19] Agarwal, V., & Chandra, K. (2021). Long-term impact of green finance on renewable energy adoption in emerging economies. International Journal of Energy Economics and Policy, 11(6), 421–433.

[20] Sharma, P., & Verma, T. (2020). Barriers and enablers of green investment: Evidence from Indian renewable energy projects. Renewable Energy, 147, 2632–2643. https://doi.org/10.1016/j.renene.2019.10.102