Publicly Backed Guarantees as Policy Instruments to Promote Clean Energy

This report summarizes the experience of public financing agencies and relevant lessons learned regarding the use of publicly backed guarantees (PBGs) to build clean energy markets. A PBG is a contractual obligation by which a government (institution), against payment of a fee, assures a compensation payment to a lender or investor in case of default by the borrowing entity. PBGs can be used for risk capital, such as equity or mezzanine finance, bank credits, bond and security issues, or letters of credit. In this report, attention is given the the challenges and potential solutions for developing and emerging countries.