Clean energy has the capital — but can it underwrite the risk?

For sectors such as grids and energy storage, managing the complex risks of financing projects and assets is now a significant barrier to growth, writes Reiner Boehning of Copenhagen Infrastructure Partners in an article on the Recharge website.

The financing gap threatening to slow trillions in clean energy investment

Capital is not the primary constraint facing the energy transition – underwriting is.

Global energy investment is expected to reach a record $3.3 trillion in 2025, with $2.2 trillion directed towards clean energy technologies, grids, storage, electrification, and low-emissions fuels – double the amount invested in fossil fuels.

Yet, despite this abundance of capital, many of the businesses and projects needed to deliver the next phase of the energy transition continue to face financing challenges.

Across private markets today, capital availability increasingly resembles a barbell. On one end sits abundant venture and growth capital backing early-stage companies. On the other sits a deep pool of institutional capital seeking exposure to mature infrastructure assets with proven operating histories, stable cash flows and established risk profiles.

Between these two ends of the spectrum lies a growing financing gap. This gap is particularly evident in the energy transition, where many businesses sit between venture-style innovation and mature infrastructure.

As companies move from development and demonstration into the construction and operation of large-scale, capital-intensive projects, their financing needs change fundamentally.

Capital requirements increase significantly, project complexity rises, and risks become more difficult to assess using traditional infrastructure lending frameworks. Yet many of these businesses have not yet reached the scale or maturity required by conventional infrastructure lenders and investors.

This challenge matters because the next phase of the energy transition depends on precisely these types of businesses and projects. While wind and solar remain critical, the transition extends far beyond renewable power generation.

Copenhagen Infrastructure Partners’ 2050 analysis estimates that Europe will need to invest approximately €5.2 trillion over the next 25 years, including €2.9 trillion in grid infrastructure alone. This reflects how the scale of investment required goes beyond transmission and across enabling infrastructure such as grids, energy storage, and low-emission fuels to build a competitive and resilient energy system.

Many of these assets sit outside traditional infrastructure lending frameworks. While conventional infrastructure credit has been built around predictable cash flows, long operating histories and standardised underwriting disciplines, energy transition assets often require significant upfront capital and combine technology, construction, operational and market risks in ways that are more difficult to assess and price.

As a result, the primary constraint is increasingly not capital availability, but underwriting capacity. Investors must be able to evaluate not only financial structures and contractual arrangements, but also technology performance, construction delivery, operational execution and evolving market dynamics.

In many cases, the ability to understand and price these risks is more important than the availability of capital itself.

Opportunity in the gap

For institutional investors, this gap also represents an opportunity. Providing credit to businesses and projects during this scaling phase can offer attractive risk-adjusted returns while supporting the build-out of critical infrastructure. However, success requires a different mindset from traditional infrastructure lending, one that recognises the unique characteristics of assets transitioning from development to deployment.

The opportunity lies in sectors where complexity, rather than a lack of capital, creates the financing gap. Assets such as energy storage, low-emission fuels, and industrial decarbonisation often require specialist technical and operational expertise to assess. For investors able to underwrite these risks, the result can be access to attractive return opportunities that are less driven by financial engineering and more by the ability to understand and price complexity.

Ultimately, the question facing the energy transition is no longer whether capital exists. Global pools of capital remain substantial. The challenge is creating pathways for that capital to reach the projects and companies responsible for building the infrastructure of a lower-carbon economy.

The next chapter of the energy transition will not be defined by the availability of capital. It will be defined by the ability to understand, structure and underwrite increasingly complex infrastructure risks. The investors that develop these capabilities will play a critical role in scaling the infrastructure required for a competitive and resilient energy system.

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