2024 Highlights and what’s next for renewable energy project finance in 2025?

It’s been an excellent year for sustainable infrastructure. Green lending is booming, with billions of dollars in clean capital flowing into the market this year. Private cleantech investment is predicted to soar over the next four years, as catalytic capital will help to de-risk green banking and promote further investment. 

But the path ahead promises some roadblocks to overcome. Though renewables are expected to continue growing — thanks to ample economic investment, job growth, and a data center-fueled rise in power demand — for many in this industry, the new federal administration raises a lot of questions. Will the Inflation Reduction Act stay intact? If not, which incentives will disappear, and when? What will changing federal policy mean for catalytic financing — and for sustainable infrastructure markets more broadly?

Much digital ink has been spilled about what this could mean for the clean energy industry, but no one’s really sure what happens next. In the meantime, we’ve spent the past year building connections with a host of project financiers and experts across the sustainable infrastructure market and sharing insights. Here’s what we’ve learned about the challenges and opportunities of green lending today — and what we’re thinking about as we head into 2025. 

Banyan Infrastructure’s best year yet

With an arsenal of digital tools and frameworks that funds need to succeed, 2024 was all about action. For Banyan Infrastructure, that meant adding new features to our platform, building out an advisory services department, and forging strategic partnerships so we can better help lenders across the country improve their digital infrastructure. 

In February, we released our inaugural project finance software industry survey, drawing on insights and information from a range of lenders to learn more about where the broader ecosystem is hitting friction and how we can collectively move the industry forward. We’re excited to have an updated version of this report on the way in 2025.

This year, Banyan Infrastructure added new impact metrics tracking options and enhanced investor support features to our platform. Already, both are saving our customers valuable time on tedious reporting requirements and provide insightful visualizations to determine program health. We’ve also streamlined our loan management options so that our customers can intake loan applications directly from the platform, and our new residential view dashboard enables lenders to capture smaller, more distributed projects and track portfolios across a wide range of types and sizes. 

Even so, the industry needs to accelerate even more—efforts around digital transformation, data infrastructure, and standardization are still ongoing, and we’re excited to be doing this work with the rest of the market. 

Collaborating on capital mobilization

This year, we collaborated with industry leaders to efficiently finance sustainable housing, accelerate the adoption of green lending practices by community development financial institutions (CDFIs), and help green banks capitalize on catalytic funding. 

With the Milken Institute and Elemental Impact — then called Elemental Excelerator — we launched a partnership that lays the foundation for financiers to maximize the impact of new funding. Our collaboration leverages Banyan Infrastructure’s software suite, Milken’s educational and best practices resources, and Elemental Impact’s funding, which will build out the program and expand community engagement. 

We also announced a new strategic partnership with Sustainable Capital Advisors (SCA), which is focused on standardizing green infrastructure financing, ensuring impact trackability and transparency, and accelerating catalytic capital deployment. Through our work with SCA, we’re helping to empower lenders and CDFIs by leveraging our technology to make it easier than ever to evaluate financial feasibility and structure investments.  

Most recently, Banyan Infrastructure established a partnership with SURE, a joint venture between nonprofits Inclusive Prosperity Capital and Housing Partnership Network. This one-of-a-kind collaboration centers on slashing energy costs and developing more sustainable and affordable housing and community infrastructure; it will couple SURE’s community lending, affordable housing, and energy finance expertise with our purpose-built software.

We see immense opportunity to grow the market by working with our partners to transform green lending and create a collaborative marketplace. 

Key Trends and Learnings from 2024

Connections, shared standards, and technology are critical

As green lenders, investors, and borrowers prepare for an influx of catalytic capital, having a connection between every part of the ecosystem is key. 

“This market needs connective tissue to join community leaders and on-the-ground organizations with project developers, to introduce those developers to project financiers, to provide technical assistance expertise to everyone involved, and to ensure a steady pipeline of projects that maximizes the impact,” explained Ileana Riverón, Banyan Infrastructure’s senior enterprise account executive, at a green lending crash course event co-hosted with consulting firm Burrell-Harper & Co. LLC.

Creating a “common language” of shared standards for the sustainable infrastructure market will accelerate clean capital deployment — regardless of the political environment. 

It’s time to eliminate the days when compiling hundreds of Excel documents with fifty-plus tabs was the norm. These traditional methods, where inefficiencies and mistakes are common, are also cumbersome, time-consuming, and siloed. Modern digital infrastructure streamlines these processes, ensuring accurate and timely data management while freeing up valuable resources for more strategic tasks.

Scalability and predictability draw in stakeholders

For investors, the more “boring and predictable” a project’s finances are, the less risky it is—generally, predictable projects are also profitable projects. Projects with a lot of uncertainty in their future often scare off risk-averse investors looking for those with strong ROI. 

To be predictable, a project needs visible and stable metrics. To scale, a project needs predictability. To maximize returns, a project needs to be scalable. 

It all starts with data standardization, collection, and transparency. Software and other digital solutions can organize data and ensure its visibility to stakeholders. That way, projects can stay on track and stay profitable. 

“I don't think a lot of those investors know that green banking has such low default ratios out there,” said Stephen Morel of the Montgomery County Green Bank in a recent Banyan Infrastructure webinar. “Having the data is just incredibly important right now to make that demonstration, bring those funds off the sidelines, and really have a standardized approach that all of the raters and all of the investment community institutional investors are familiar with because that's how we're going to end up continuing to grow liquidity in the sector.”

Digitization lets technology be an expediting force

Green infrastructure financing is facing a slew of bottlenecks: capital deployment, scaling workflows, data management, and paperwork. 

Many green banks and project financiers may invest in smaller projects (like a local community solar farm); while these projects might need less capital, they require the same amount of due diligence and paperwork as larger projects. 

“We’re looking at 100 times the amount of data to work through, 100 times the amount of covenants, APIs, performance metrics, reporting metrics, and compliance metrics to track,” Banyan Infrastructure’s COO and Co-Founder Amanda Li explained in a recent webinar. “Each of these projects still has contracts, counterparties, Excel files, and ongoing operational, financial, and compliance data tracking…Digitization and engaging with software help you reduce that bottleneck.”

Her sentiment was echoed by Heather Braithwaite, CIO of the Collective Clean Energy Fund (CCEF). 

“It's significant to be expected to deploy, you know, $100-plus million in one year, perhaps,” Heather said. “You're not looking at half-a-million-dollar projects anymore. You're looking at $5-million projects, $10-million projects, $20-million projects. That also means that you need a different type of underwriting to help with the level of sophistication needed. So we needed a system that could support large projects and large amounts of data and easily allow our underwriters to integrate into that system…because we're not doing business as usual. This is a whole different world for us.”

Digitized, organized data empowers financiers to connect capital to sustainable infrastructure projects. Having that data available lets lenders show their investors the fine-grained details of projects — including low default ratios. That builds trust within the market, leading to liquidity in the sector. 

Data centralization reduces risk

If data is spread out between multiple platforms and unorganized, it’s easy for information to get lost or to be incorrectly entered. Submitting incorrect or incomplete data to investors can be a hit to your image at best or a tax snafu at worst. 

A central source of information — like our data management platform — can eliminate those worries and help you stay on top of your reporting and payments. 

“[Banyan Infrastructure’s system] reduces our reputational risk because having all our data in one place helps us avoid potential errors,” explained Advantage Capital’s Kyle Nesselbush in a Q&A. “We’re also using the platform to manage our projections and forecasting; now that we have all our deal data in the platform, viewing deal health has been easy.”

What’s next in 2025?

We can’t tell you everything that’s in store for 2025. However, one equation is simple: More available money means more sustainable infrastructure. There are tens of billions of dollars in potential capital out there waiting to be unleashed, but without transparency and clear viability to this burgeoning market, investors may seek to put their money elsewhere. Now more than ever, the project finance industry needs to clear a broader path to allow for more capital in the market.

This requires structuring and standardizing the project finance deals to build distributed clean energy assets and other sustainable infrastructure. Doing so will open the door for community organizations, green banks, CDFIs, and nonprofits to engage Wall Street so that together, they can fund profitable projects with community impact. One of the industry’s biggest challenges today is being able to assess these smaller projects and create lanes for bigger investors with more capital to enter the market. Building those lanes — and making them wide enough for a range of investors to join in — will be key to maximizing the full transformative potential of this market.

The path to progress is not always a straight line. As policies and market conditions change, project financiers may see hurdles and setbacks in our path. But if we stay the course on reliable, sustainable infrastructure investment, we will continue building the future we want to live in. Let’s come together, roll up our sleeves, and make this vision a reality.

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