Washington, DC – In the race to deploy clean energy technologies, market uncertainties are holding back billions in potential private capital for energy projects. To unlock these investments, governments and private entities are introducing new demand-side support tools to effectively de-risk projects, kickstarting robust markets that attract private investment and stimulate consumer demand.
To better understand these financial tools and their potential, today, the Bipartisan Policy Center released a new report, Kickstart Markets for Clean Energy Technologies: Demand-Side Support for Dummies. The report analyzes a range of demand-side strategies, evaluating their relative strengths, weaknesses, and the specific market challenges they are best suited to address.
“From domestic critical mineral production to developing sustainable aviation fuel, demand-side support tools can play a major role in catalyzing private sector investment in energy transition projects, as well as securing the supply of commodities that are critical to our nation’s energy security,” said Tanya Das, BPC senior associate director of energy innovation.
BPC’s guide breaks down how various demand-side support tools work in practice, examining the risks mitigated by each, their role in stimulating investment, and includes historical examples of their utilization. The tools evaluated are:
- Direct Procurement
- Procurement Standard
- Market Standard
- Consumer Tax Credit
- Forward Contract
- Offtake Agreement
- Price Floor with Procurement
- Market Maker
- Advance Market Commitment
While there is no one-size-fits-all solution, each tool has the potential to play a vital role in de-risking specific markets or projects to catalyze private investment in the next generation of clean energy technologies needed to meet U.S. energy and climate goals.