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De-risking renewable investments: Internalizing the risks and quantifying the impact of de-risking instruments

Author

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  • Lévêque, Clémence
  • Shirizadeh, Behrang
  • Trüby, Johannes

Abstract

Mobilizing sufficient investment for renewable energy is critical to achieving global climate goals, yet high financing costs – primarily driven by risk perceptions – continue to hinder the deployment of variable renewables that are capital intensive, especially in emerging economies. This study comprehensively assesses the risks affecting renewable investments, categorizing them into political, economic, transformation, resource, curtailment, and technological risks. We then map these risk categories to targeted de-risking instruments, including guarantee schemes, regulatory measures, and economic incentives. Building on an extended Capital Asset Pricing Model (CAPM), we develop and calibrate a novel cost of capital model that internalizes individual risk elements and the effect of de-risking tools across a global dataset.

Suggested Citation

  • Lévêque, Clémence & Shirizadeh, Behrang & Trüby, Johannes, 2026. "De-risking renewable investments: Internalizing the risks and quantifying the impact of de-risking instruments," Renewable and Sustainable Energy Reviews, Elsevier, vol. 227(C).
    • Handle: RePEc:eee:rensus:v:227:y:2026:i:c:s1364032125012432
    DOI: 10.1016/j.rser.2025.116570
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    References listed on IDEAS

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    1. repec:aen:journl:ej43-1-quirion is not listed on IDEAS
    2. Maruyama Rentschler,Jun Erik & Kornejew,Martin Gunter Michail & Hallegatte,Stephane & Braese,Johannes Michael & Obolensky,Marguerite Anne Beatrice, 2019. "Underutilized Potential : The Business Costs of Unreliable Infrastructure in Developing Countries," Policy Research Working Paper Series 8899, The World Bank.
    3. Behrang Shirizadeh & Quentin Perrier & Philippe Quirion, 2022. "How Sensitive are Optimal Fully Renewable Power Systems to Technology Cost Uncertainty?," The Energy Journal, , vol. 43(1), pages 43-75, January.
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    Cited by:

    1. Silke Johanndeiter & Jonas Finke & Justus Heuer, 2025. "Most certainly certain? The Impact of Contract for Difference Design on Renewables' Strike Prices and Electricity Market Risks," Papers 2512.17508, arXiv.org.

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