Zula Luvsandorj
Financing clean energy in emerging and high-risk markets remains one of the greatest challenges in the global energy transition. These markets often have an abundance of renewable resources, rapidly growing energy demand, and in many cases the opportunity to design modern systems without being locked into outdated infrastructure. Yet despite this potential, investors are reluctant to commit. Political instability, unclear regulations, and underdeveloped financial markets combine to create an environment where even well-structured projects struggle to secure funding. Unless these barriers are addressed, the very countries that stand to benefit most from clean energy risk being left behind.
In my work across Europe, the Middle East, Africa, and now Mongolia, I have seen how these challenges play out on the ground. The reality is not a shortage of capital. Global investors are actively searching for climate-aligned opportunities. The real issue is the perception of risk and the lack of mechanisms that give financiers confidence that their money will be safe. If we want to unlock large-scale investment in high-risk markets, several things need to change.
Clearer rules and stronger policies
Certainty is the foundation of investment. In many high-risk markets, projects become stuck in lengthy approval processes, or investors find that policies change mid-way through development. To overcome this, governments need to establish clear, transparent frameworks that can withstand changes in political leadership. Stable feed-in tariffs, guaranteed grid access, and reliable permitting processes are not optional extras, they are the baseline conditions required to build trust with the private sector. Predictable regulation provides investors with the long-term visibility they need to make commitments that often stretch over decades.
Better ways to share risk
Investors will not move into high-risk markets without confidence that downside risks are managed. This means using financial structures that distribute risk more evenly between governments, development banks, and private capital. Blended finance, where concessional loans or guarantees reduce exposure for commercial investors, has already proven effective in unlocking projects that would otherwise have been considered too risky. Insurance products, currency hedging mechanisms, and credit enhancements are equally important. These tools do not eliminate risk entirely, but they create a financial environment where investment becomes not only possible but attractive.
A recent example of this in practice can be seen in Mongolia, where ACWA Power has entered the market and signed a USD 1 billion Memorandum of Understanding with the European Investment Bank. The agreement focuses on financing clean energy projects and mobilising private sector participation in green hydrogen development. It shows how collaboration between international developers, public financiers, and host governments can de-risk investment and establish the credibility needed to attract further capital into high-potential but underfinanced markets.
Stronger local capacity
A project is only as strong as the institutions and partners that support it. In high-risk markets, regulators and government agencies are often under-resourced and lack the experience to manage complex energy infrastructure. Building local capacity should therefore be seen as a priority, not an afterthought. This includes training for regulators, technical assistance for ministries, and the strengthening of local financial institutions. International developers should also view local partnerships as a strategic advantage. Strong domestic partners bring credibility, cultural knowledge, and community trust, all of which are essential to the long-term success of clean energy projects.
Changing the perception
Too often, investment in high-risk markets is framed as an act of charity or corporate social responsibility. This perspective is outdated and unhelpful. These economies are not simply recipients of aid; they are emerging growth markets with the potential to become future leaders in renewable energy production and even energy exports. Framing investment in these regions as a strategic opportunity, rather than a moral obligation, changes the conversation entirely. For many global investors, the recognition that these markets represent untapped potential could be the decisive factor in unlocking capital flows.
A call to action
The success of the global energy transition cannot be measured only in the progress of developed, low-risk countries. Its real test lies in whether we can mobilise investment at scale in the regions where it is most difficult, but also most necessary. Achieving this will demand courage and vision from governments, creativity from financiers, and determination from developers. If these groups work together, high-risk markets can become high-return opportunities, delivering resilient, low-carbon energy systems in the very places most exposed to climate change.
The barriers to financing clean energy in these markets are real, but they are not insurmountable. They are problems of design, governance, and perception, and each can be addressed with the right mix of reforms and partnerships. If we succeed, the transition will not only be faster and more effective, it will also be fairer, ensuring that no region is excluded from the opportunities of a low-carbon future.
Zula Luvsandorj is an energy strategist and global infrastructure finance expert with more than 15 years of international experience and over $20 billion in closed deals. She currently advises the Deputy Prime Minister of Mongolia on energy transition and sustainable investment strategy. An Oxford Saïd Executive MBA graduate and former Project Finance Advisor to the UK Government’s Cabinet Office, Zula has led major energy and hydrogen initiatives across EMEA. She is also Co-founder of Sunsteppe, a clean energy investment firm in Mongolia.
