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

Clémence Lévêque, Behrang Shirizadeh () and Johannes Trüby
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Clémence Lévêque: LGI - Laboratoire Génie Industriel - CentraleSupélec - Université Paris-Saclay, Deloitte Economic Advisory
Behrang Shirizadeh: CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris, Deloitte Economic Advisory
Johannes Trüby: Deloitte Economic Advisory

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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. Our results show that, without de-risking, the cost of capital can exceed 16 % for solar PV and wind projects in high-risk countries, compared to below 6 % in advanced markets. De-risking instruments – such as political risk guarantees and tax incentives – can reduce the project cost of capital by up to 5 percentage points, leading to a 30 %–35 % reduction in the levelized cost of energy. These findings highlight the critical role of tailored de-risking strategies in accelerating clean energy transitions and offer actionable insights for policymakers and investors.

Date: 2026-02
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Published in Renewable and Sustainable Energy Reviews, 2026, 227, pp.116570. ⟨10.1016/j.rser.2025.116570⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05510222

DOI: 10.1016/j.rser.2025.116570

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