The fintech solution to the energy transition

Fintech innovations in the renewable energy space, like Innovo, play an imperative role in accelerating the energy transition. Renewable energy projects rely on financial innovations, such as project finance structures or Power Purchase Agreements (PPAs) to secure funding. The advancement of climate tech relies on financial mechanisms to support their scalability. Fintech has the ability to reduce soft costs, increase capital flow, and streamline financial workflows.

• Reducing Soft Costs and Automating Processes: Several sustainable infrastructure projects are still dependent on outdated tools, thereby creating inefficiencies. Soft costs such as accounting and compliance usually constitute a third of the total price for solar projects. Software solutions automate transactions and standardize financiers’ due diligence processes, accelerating investment decisions. The elimination of such bottleneck friction invites investors to work within this industry space.
• Managing Renewable Energy Project Transition: The process of financing a renewable energy project differs from the norm, in that it has nuanced clauses, several calculations specific to the renewable energy project and scope. The legal work, underwriting, and securing financing makes it difficult for contracts to scale. The solution is simple: FinTech. Software solutions are able to increase the feasibility of scale by enabling better tracking and management of digital assets. This is where blockchain platforms like Innovo play a crucial role, unlocking better buying, selling, and management of renewable energy certificates. By building a digital infrastructure, Innovo integrates fintech innovations with REC workflow automation, risk management, and real-time tracking, improving efficiency and scalability. 
• Bringing Transparency to the Market: By now, it has become clear that carbon offsets and other environmental attribute commodities (EACs) enable the reduction and removal of GHG emissions. As corporations chase their net-zero goals, the demand for EACs is increasing exponentially. To mitigate the mistrust and confusion associated with the voluntary carbon market, blockchain solutions push for a digital renaissance. Such solutions will be instrumental in allowing for seamless tracking, tracing, and liquidity within the voluntary carbon market, preventing double counting and enhancing granularity. 
• Accessing Capital for Energy Transition: The current banking climate has led to growing concerns relating to the funding of sustainability projects. The situation has a wedge to increase lending and underwriting solutions. FinTech solutions, such as climate focused rapid finance, or EV focused financing could reduce investor risks. The onset of a crisis brings newer solutions and opportunities. Commodities such as renewable energy certificates (RECs) further support project financing by providing a second revenue stream to clean energy developers. Platforms like Innovo help unlock better project financing and liquidity for developers, enabling them to focus on their primary business function: generating clean energy. 

The fintech revolution within the energy space is in its initial stages. Capital investments in the renewable sector are accelerating, with over 70% investments in the new power generation space directed towards renewables. The global shift towards renewable power will, however, need to be supported with strong financing. By streamlining transactions, reducing investor risk, and increasing market transparency, fintech solutions will play a pivotal role in accelerating the global energy transition. Innovo is proud to provide a climate tech solution that is revolutionizing how environmental assets are transacted and managed, helping to accelerate the energy transition that is already underway.