This article is part two in a three-part series exploring the global challenges on the road to Net Zero.
In part one, we examined the physical bottleneck -why energy efficiency programs alone are no longer enough, and how reaching NetZero requires changing the paradigm to focus on what type of generation is built and where it is integrated.
In this installment, we turn to the financial bottleneck: the capital, risk, and return challenges shaping how projects move from vision to execution.
Net Zero will not be achieved on ambition alone. It requires unprecedented investment - trillions of dollars in new renewable capacity, storage, and enabling technologies. While global capital is available, many investors are holding back - waiting for greater certainty around returns, policy stability, and project performance. The issue is not a shortage of money, but a shortage of certainty.
For commercial and industrial (C&I) energy leaders, project developers, and technology providers - those managing energy transformation outside of traditional utilities - the challenge is especially acute. They must convince CFOs, boards, and investors that clean-energy investments will deliver measurable returns, strengthen operations, and remain resilient amid changing policies and incentives, fluctuating energy prices and demand, and rapidly advancing technologies.
The Financial Challenge
Commercial and industrial (C&I) energy stakeholders, project developers, and technology providers face a consistent set of financial and structural obstacles:
- Unclear permitting processes delay projects and inflate costs.
- Market volatility in energy prices, supply chains, and equipment costs makes payback modeling uncertain.
- Policy fragmentation across regions and states complicates planning, with continual changes - and in some cases, uncertainty over which programs will remain funded.
- Scaling gaps create investor skepticism that promising pilots can perform at commercial scale.
- Rapid technological advancements add complexity to financial decisions, as investors weigh the risk of emerging technologies becoming obsolete before the end of a project’s lifecycle.
At the same time, the global energy transition is intensifying competition for capital. Rising interest rates, tightening fiscal policy, and competing national incentives are reshaping the financial landscape, forcing energy leaders to be more strategic in how they plan, validate, and fund Net Zero projects.
Regional Dynamics
The EU
Europe has some of the world’s strongest clean energy policies, but financing gaps persist. Despite clear Net Zero targets and long-standing carbon pricing, the pace of renewable investment still varies widely by market and project type.
Challenges:
Grid congestion and curtailment continue to discourage developers, especially in regions like Germany and northern Europe where transmission capacity lags renewable build-out. Even with strong subsidies, uncertainty around permitting timelines and infrastructure delivery slows investment
Other challenges include:
- Inflationary pressure on equipment, materials, and construction costs, which erodes expected returns.
- Currency fluctuations between the euro and local project financing markets, adding exposure for multinational developers.
- Interest-rate sensitivity, which has raised the cost of capital for projects that depend on long-term debt financing.
- Un-even access to incentives, where national-level programs differ significantly in structure and stability, creating investor hesitation.
What Companies Are Doing:
Renewable developers are increasingly pairing PPAs with storage or flexibility contracts to stabilize returns and mitigate curtailment risk.
Financial tools such as Contracts for Difference (CfDs) also play a central role in de-risking investment. CfDs guarantee a fixed “strike price” for generated electricity - protecting developers if wholesale prices fall, and returning value to the system if prices rise. This mechanism provides revenue certainty, allowing developers to secure financing on better terms.
However, CfD frameworks vary across EU markets. While the UK, Denmark, and the Netherlands have well-established schemes that underpin offshore wind and large-scale solar, other markets still lack predictable long-term price guarantees. This patchwork limits access to low-cost capital and slows expansion of renewable projects in emerging EU member states.
North America
The U.S. Inflation Reduction Act (IRA) has driven record levels of clean-energy investment - but its future direction is increasingly uncertain. Debate in Washington over federal spending priorities and possible revisions to clean-energy tax credits has created policy risk for long-dated projects. While projects already underway are continuing under existing commitments, developers are approaching new investments with greater caution.
Despite the political headwinds, multiple IRA and IIJA programs remain active and bankable today, continuing to support renewable generation, storage, and grid modernization.
Challenges:
- Policy uncertainty and regional regulatory variation continue to complicate planning and financing for multi-state portfolios.
- Supply-chain disruptions persist, compounded by tariff disputes with major equipment-exporting nations, which have increased costs and delayed delivery of solar panels, inverters, and battery components.
- High interest rates and tightening fiscal conditions have increased the cost of capital, reducing project margins
- ROI uncertainty: Even with federal incentives, some projects struggle to demonstrate a clear return fast enough to satisfy corporate boards and CFOs
- Datacenters - driven by the rapid growth of AI, cloud, and digitalization - are creating massive new electricity demand. While primarily a physical and grid-capacity issue, this surge in demand has financial implications as it intensifies competition for renewable PPAs and raises infrastructure costs
What’s still viable today:
- Clean electricity tax credits remain active, offering technology-neutral incentives for renewable generation and investment.
- Direct-pay and transferability provisions enable smaller developers and tax-exempt entities to monetize credits efficiently.
- The stand alone storage ITC and DOE Loan Programs Office continue to support large-scale storage, grid upgrades, and virtual power-plant (VPP) projects.
- The IIJA’s Grid Resilience and Innovation Partnership (GRIP) program provides significant funding through 2026 for grid modernization, advanced conductors, and flexibility projects.
What Companies are Doing:
Leading corporations are combining long-term PPAs with flexibility strategies to hedge against volatility and curtailment risk. Major technology firms - including Google, Microsoft, and Amazon - are investing directly in renewable generation to power data-center expansion, pursuing 24/7carbon-free energy targets that align sustainability with reliability.
Others are leveraging IRA and IIJA incentives to co-fund storage, grid interconnection, and smart-load management projects - ensuring capital efficiency even amid policy and market uncertainty.
Australia
Australia’s abundant solar and wind resources make it a natural leader in clean-energy investment, but policy uncertainty and transmission constraints, like in many other parts of the world, continue to pose challenges.
Challenges:
A lack of consistent long-term regulation and high grid-upgrade costs deter investors. The grid—originally designed around centralized coal generation - requires major reinforcement to integrate distributed renewables. Developers also face congestion and curtailment risks in areas where renewable build-out has outpaced transmission.
What Companies are Doing:
Australia has become a global frontrunner in battery-storage deployment, with both utility-scale and commercial installations accelerating rapidly. Flagship projects like the Hornsdale Power Reserve, Victorian Big Battery, and Waratah Super Battery have demonstrated how large-scale storage can deliver system stability, frequency control, and renewable firming.
At the same time, many C&I companies are investing behind the meter in rooftop solar, on-site storage, and fleet electrification, where ROI is clearer and regulatory complexity is lower. Aggregated battery fleets and Virtual Power Plants (VPPs) are also expanding -enabling businesses and consumers to earn revenue by providing flexibility services back to the grid.
These examples show how strong battery economics and clear market participation pathways can help overcome policy uncertainty and financing risk - offering a model other regions can learn from.
Where Enscryb Fits In
Enscryb bridges the gap between ambition and investment by giving energy leaders the tools to de-risk projects before money is spent:
- Simulate: Use digital twins to model renewables, storage, EVs, and flexible loads across multiple scenarios - normal operations, peak demand, or extreme weather.
- Validate: Quantify ROI with data-driven insights. Boards and investors can approve projects with confidence, backed by simulations that account for curtailment, market risk, and flexibility value
- Execute: Move from validated business case to deployment with clear, measurable KPIs.
- Orchestrate: Once operational, Enscryb ensures assets perform as modeled - capturing stacked revenues and delivering real returns.
Capital flows where risk is clear. Enscryb provides the clarity and confidence investors need to fund the transition - and ensures every megawatt of flexibility delivers measurable value. Unlocking the power of energy flexibility together.
Coming Up - Part 3: The Human and Digital Bottleneck
In the final article of this series, we’ll explore the human and digital side of the Net Zero challenge - how skills gaps, data silos, and operational complexity are slowing progress, and how digitalization can empower teams to act with confidence
