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An Integrated Control Tower: Unlocking Long-Term Investment Capital for Clean Energy Innovation

TitleAn Integrated Control Tower: Unlocking Long-Term Investment Capital for Clean Energy Innovation
Publication TypeConference Paper
Year of Publication2017
AuthorsIn, SYoung, Monk, A, Levitt, R
Conference NameStanford Clean Energy Finance Forum Solution Paper Series, Precourt Institute for Energy
Abstract

As recent history highlights, there are numerous challenges in bringing novel energy technologies from the lab all the way to the global energy marketplace. But one challenge in particular has proven particularly intractable recently; the lack of financing for clean energy entrepreneurs. In this solution paper, we suggest that new capital inflows can and will increase if we can better allocate the risks (and thus returns) of clean energy investments to the parties that can shoulder them. As an attempt at a “solution”, we develop a blueprint of a new investment intermediary that could achieve high investment returns through a multi-strategy vehicle that better aligns risks with investors. This vehicle will work as an integrated control tower, offering a tailored path to clean energy companies / projects for various types of large, long-term investors. We refer to this process as a “re-intermediation” of clean energy finance, as it is our belief that unlocking sufficient capital for the clean energy industry to thrive demands new financial intermediaries. Specifically, this new investment vehicle will look to simultaneously deliver three core functions: (1) act as an anchoring institution that provides small amounts of priming capital and perhaps even take a first-loss position; (2) act as a trusted financial intermediary for long-term institutional investors (LTIs) looking to provide equity and debt capital for longer duration projects; and (3) serve as an information platform that provides reliable and objective information about clean energy companies or projects in a highly transparent and trustworthy manner. Such an investment vehicle will, we believe, lower barriers to clean energy funding and optimize access to available financial resource by directing “investor traffic” towards the most efficient and aligned investments products and opportunities.

URLhttps://papers.ssrn.com/sol3/papers.cfm?abstract_id=3062351