S&P GlobalRenewable Energy Funding inUnleashedSeptember 2023This article,by S&P Global Ratings and S&P Global Commodity Insights,is a thought leadership report thatneither addresses views about individual ratings nor is a rating action.S&P Global Ratings and S&P GlobalCommodity Insights are separate and independent divisions of S&P Global.AuthorsS&P Global RatingsTrevor D'Olier-Lees|Gonzalo Cantabrana Fernandez Aneesh Prabhu Laura Li PierreGeorges Evan GunterS&P Global Commodity InsightsPeter Gardett Roger Diwan Eduard Sala de Vedruna l Chris DeLuciaContributorsAngela Long Carla DonagheyKey TakeawaysMany governments around the world have been making progress mobilizing public andprivate capital to accelerate the energy transition,with significant money inflows intoprojects in recent years.These inflows are necessary to meet the tripling of fundingneeds for low-carbon projects across sectors by 2030 to meet 2050 net-zero goals.These inflows are particularly pronounced in the United States,China and theEuropean Union-responding to high-level policy goals,yet executed throughdistinctive financing channels.These achievements,however,still fall short of whatis needed to meet net-zero greenhouse gas emissions goals as laid out in the ParisGovernments areAgreement-particularly given lower activity outside these key regions.turning to capitalmarkets because of-We see capital flows currently strongly favoring renewable power generating assets,the immense scale ofnamely wind and solar,with less focus on,for example,transmission and storage.investment expectedThis dislocation between policy intent and current investment is likely to result into be needed in theintegration bottlenecks and dysfunctioning energy markets unless market designcoming decades.evolves quickly.Adapting policies and regulations also comes with risks for developers and investors,with reduced visibility and predictability in market forecasts.IntroductionNational governments and global financial institutions have placed capital allocationat the heart of their energy and industrial policies to accelerate and shape the energytransition.Governments are turning to capital markets because of the immense scaleof investment expected to be needed in the coming decades.It its estimated thatcurrent targets agreed to by the world's major economies under the Paris Agreementwould require at least tripling of global energy transition investment(including alldecarbonization)to more than $5 trillion each year between 2023 and 2050,wellbeyond what government balance sheets can handle alone.Investment in renewablegenerating assets is a key part of the transition,with estimated annual investment of$1.4 trillion'through 2050.1.International Renewable Energy Agency (IRENA)World Energy Tran sitions Outlook 2023,www.irena.org.spglobal.comCapital Transition Unleashed|2