Financing Energy Innovation: The Need for New Intermediaries in Clean Energy
Stanford Global Projects Center Working Paper Series, 2018
36 Pages Posted: 5 Oct 2018 Last revised: 28 Mar 2019
Date Written: November 11, 2018
While consistent and long-term sources of investment capital are needed to flourish the clean energy ecosystem, current financial intermediaries have failed to effectively channel sources of funding to entrepreneurs. We find that investment opportunities (and risks) are not assigned to the appropriate investors due to the fragmented nature of investor networks and the large information asymmetries among different investor categories and companies. Yet, there are few, if any, investment vehicles today that take these barriers into consideration. Therefore, this study examines whether the traditional theory adequately addresses organizational and institutional barriers that exist in the clean energy investment market, and refines the roles and functions of intermediation in fostering the transition to a low-carbon economy. We propose three functions that are critical to intermediate a broad range of investors in clean energy and facilitate an intelligent information flow over the entire clean energy development cycle. This study concludes by proposing a new coordinating platform design that simultaneously coordinates the three proposed intermediary functions.
Keywords: Clean Energy Development and Investment; Institutional Barriers; Financial Intermediaries; Theory of Intermediation; Clean Energy Investing Ecosystem; Financial Markets; Entrepreneurship; Institutional Investors
JEL Classification: G23, G24, Q42, Q55, Q58
Suggested Citation: Suggested Citation