This report explores the potentialfinancing mechanism options that can be employed to catalyzemore private sector investment in clean energy (renewableenergy and energy efficiency) in the small island developingstates (SIDS). Various financial instruments that have beenused successfully to date are described and placed in thecontext of the issues and constraints of the SIDS, withsuggested options for discussion and follow up. Greeninfrastructure finance, as defined in the report, makes theimportant point that is the combination of financial andnonfinancial interventions and instruments that can makegreen investments in infrastructure more affordable and lessrisky to private sponsors, financial markets, andgovernments. The objective of this report is to identify andassess options that can help increase investment inrenewable energy and energy efficiency in SIDS through theadoption and funding of financing mechanisms by SIDS anddevelopment partners with special attention given to therole that the private sector can play. Many renewable energytechnologies are characterized by high initial capital costswith relatively low operating costs compared to thermalalternatives. By providing an analysis of options for afinancing facility to catalyze renewable energy and energyefficiency, this work is intended to inform the discussionsamong SIDS and development partners interested in actions tostimulate investment in renewable energy and energyefficiency. This report summarizes the results of the twostages. The assessment and selection of options identifies anumber of measures that will be needed to stimulateincreased private sector participation - project sponsorsand developers, equity funds, lending institutions - forenergy efficiency and renewable energy. The backgroundmaterial reviewed for this report has been summarized in the annexes.
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