This article aims at examining the focal issues in the literature on the financing of renewable energies. To achieve this goal, the paper conducts a bibliometric analysis of the academic publications referenced in Web of Science up to June 2018 using network and textual analysis tools. Our analysis reveals 11 main clusters of publications defined by their focus on specific types of finance, and their geographical and technological scope. Based on these categorizations, we highlight the fact that a majority of the sample focuses on market-based policy instruments used to support renewable energy development. This body of literature deals generally with developed countries. Accordingly, there are few studies of direct financing flows from the public and private sectors and the comparison between these flows. However, our path analysis reveals that private investment analysis is an emerging subject. We also observe that particular clusters, or parts of clusters, are dedicated to the analysis of types of finance specific to developing countries (e.g. development aid, Clean Development Mechanisms). Furthermore, the literature generally focuses on mature renewable electricity technologies (solar PV and onshore wind).
The Paris Agreement was adopted by countries at the conclusion of the 21st Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) and commits the international community to the objective of limiting global warming to below 2 °C by 2100. This ambitious objective involves a major transformation of countries’ energy systems (IPCC, 2015). One possible way to mitigate the risks associated with climate change is through a rapid and large scale expansion of Renewable Energy (RE). They are defined as “energy resources that are naturally replenishing but flow-limited. These energy sources are virtually inexhaustible in duration but limited in the amount of energy that is available per unit of time” (U.S. Energy Information Administration, 2018). As they are low emitters of greenhouse gases (Amponsah et al., 2014) and because they reduce energy dependence, tackle air pollution (OECD/IEA, 2017), and create jobs (Lehr et al., 2012; Perrier and Quirion, 2018; Wei et al., 2010), REs are a major contributing factor to the promotion of sustainable growth. In 2016, 176 countries RE targets (IRENA et al., 2018).
Since the 2000s the development of RE has been accelerating. RE account for two-thirds of the world’s new energy capacity in 2016 (IEA, 2017a). However this development is not fast enough to meet the climate goals (Robiou du Pont and Meinshausen, 2018) because of numerous economic, political, social, environmental, and technological hurdles (Can Şener et al., 2018). The funding of RE and more especially the availability of monetary flows to fund the development of REs is also a major obstacle. Indeed fossil fuels continue to capture the majority of investment flows in the energy supply sector. In 2016 USD 316 billion were spent on RE (IEA, 2017b), i.e. less than 22% of the total global energy investment whereas the share for fossil fuel was 60% (fig. 1). According to the International Energy Agency (IEA), attaining climate change objectives would require a reversal of these proportions by 2050 (OECD/IEA, 2017).
Such amounts of investments raise the issue of their funding all the more so as RE projects have been greatly affected by the funding gap generated by the recent financial crisis which has widened due to waning public support (Engelken et al., 2016; Vasileiadou et al., 2016) and the lack of private finance (Yildiz, 2014). Closing the financing gap is a major issue for energy transition. The successful funding of RE requires a better understanding of the types of finance, financial actors, and their willingness to invest in RE.
To date few reviews have been made of the funding of RE, leaving the structure of this field unexplored. Several literature reviews focus on national barriers to the development of RE (Can Şener et al., 2018; Darmani et al., 2014) and on RE support policies (Abdmouleh et al., 2015) while the funding of renewable electricity in the United States has been the subject of a review by Krupa and Harvey (2017). However, these studies are not based on a method for systematic review of the literature.
This article aims to study the structure of the literature on RE funding by asking whether the literature reflects the diversity of the types of finance for RE. To achieve this goal, the paper provides a bibliometric analysis of the academic publications referenced in Web of Science up to June 2018 and uses network and textual analysis tools.
The bibliographic coupling analysis highlights 11 main clusters of publications. The analysis shows a number of overlaps between clusters revealing the emergent character of the field. The clusters share a common focus on the production of renewable electricity, leaving the analysis of heating and cooling aside. Two mature technologies, PV and onshore wind, emerge as the main technologies of interest in the literature. This result is consistent with the clear focus of national policies and investment on these energies (REN21, 2018).
Among the five major types of finance, we find that public policies based on market instruments are dominantly studied. Moreover, the literature focuses marginally on direct public investments and private investments that encompass funding from financial investors and non-financial investors as well as households/individuals. These findings reveal that the state is only seen as a regulator (Mazzucato, 2015), mainly devoted to creating conditions for investment and not to investing directly in REs through public investment funds. We also show that only a handful of works examine the funding of risky technologies through public policies and, to a lesser extent, VC investments.
Looking at the geographical scope of the clusters, the literature highlights: i) a difference in policies within developed countries by analysing on one side policies in US and policies in Europe on the other side, and ii) a difference in the types of finance in developing countries. Interestingly one of the two smallest clusters focuses on the Chinese IDE in Europe, analysing the recent emergence of these South to North financial flows.
Consistent with the previous results, the main path analysis and the examination of the clusters’ dynamic show that the literature first focuses on policies historically implemented by States to develop RE and their design. Since the mid-2000s, studies about investors’ characteristics in the design of policies have started to be more influential in the literature leading to a focus on private investments recently. This recent focus implies the dispersion of the works on private investments among clusters: this sub-field is not yet structured, i.e. confirming its emerging character. Moreover, studies on developing countries and RE funding at local level cannot be regarded as influential thematic areas since they do not appear in the main path even if they are the subject matter of some clusters.
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