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Sustainable Finance
Nader Naifar
Ahmed Elsayed Editors
Green Finance
Instruments,
FinTech, and
Investment
Strategies
Sustainable Portfolio Management in
the Post-COVID Era
Sustainable Finance
Series Editors
Karen Wendt, CEO. Eccos Impact GmbH, President of SwissFinTechLadies,
President Sustainable-Finance, Cham, Zug, Switzerland
Margarethe Rammerstorfer, Professor for Energy Finance and Investments, Institute
for Finance, Banking and Insurance WU, Vienna, Austria
Sustainable Finance is a concise and authoritative reference series linking research
and practice. It provides reliable concepts and research findings in the ever growing
field of sustainable investing and finance, SDG economics and Leadership with the
declared commitment to present the theories, methods, tools and investment
approaches that can fulfil the United Nations Sustainable Development Goals and
the Paris Agreement COP 21/22 alongside with de-risking assets and creating triple
purpose solutions that ensure the parity of profit, people and planet through choice
architecture passion and performance. The series addresses market failure, systemic
risk and reinvents portfolio theory, portfolio engineering as well as behavioural
finance, financial mediation, product innovation, shared values, community build-
ing, business strategy and innovation, exponential tech and creation of social capital.
Sustainable Finance and SDG Economics series helps to understand keynotes on
international guidelines, guiding accounting and accountability principles,
prototyping new developments in triple bottom line investing, cost benefit analysis,
integrated financial first plus impact first concepts and impact measurement. Going
beyond adjacent fields (like accounting, marketing, strategy, risk management) it
integrates the concept of psychology, innovation, exponential tech, choice architec-
ture, alternative economics, blue economy shared values, professions of the future,
leadership, human and community development, team culture, impact, quantitative
and qualitative measurement, Harvard Negotiation, mediation and complementary
currency design using exponential tech and ledger technology. Books in the series
contain latest findings from research, concepts for implementation, as well as best
practices and case studies for the finance industry.
Nader Naifar • Ahmed Elsayed
Editors
Green Finance Instruments,

FinTech, and Investment
Strategies
Sustainable Portfolio Management
in the Post-COVID Era
Editors
Nader Naifar Ahmed Elsayed
Department of Finance and Investment Department of Economics and Finance
Imam Mohammad Ibn Saud Islamic United Arab Emirates University
University (IMSIU) Al Ain, United Arab Emirates
Riyadh, Saudi Arabia
ISSN 2522-8285 ISSN 2522-8293 (electronic)

Sustainable Finance
ISBN 978-3-031-29030-5 ISBN 978-3-031-29031-2 (eBook)
https://doi.org/10.1007/978-3-031-29031-2
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland
AG 2023
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The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
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The publisher, the authors, and the editors are safe to assume that the advice and information in this
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the editors give a warranty, expressed or implied, with respect to the material contained herein or for any
errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional
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This Springer imprint is published by the registered company Springer Nature Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Preface
In a post-COVID-19 pandemic era, a sustainable financial system is getting more

attention, and policymakers are now moving into investment and financing decisions
based on sustainable development. According to the European Commission, “Sus-
tainable finance refers to taking environmental, social, and governance (ESG)
considerations into account when making investment decisions in the financial
sector, leading to more long-term investments in sustainable economic activities
and projects.” Sustainable finance contributes to achieving sustainable recovery
from the impacts of the COVID-19 pandemic.
Green finance is vital in mobilizing financial resources and hedging against
environmental risk to achieve a financially sustainable system. Moreover, green
financial instruments provide alternatives for investors and regulators for portfolio
management and risk minimization.
Over the last few years, financial technology (FinTech) has been considered one
of the most topical areas in the global financial services industry. The development
of distributed ledger technology, big data, smart contract, peer-to-peer lending
platforms, biometrics, and new digital has motivated innovation in the financial
services industry and the development of new financing and investment strategies.
The marriage of sustainability with Fintech helps policymakers to achieve ESG
considerations when making investment and financing decisions.
This book, “Green Finance Instruments, Fintech, and Investment Strategies: An
Analysis of Sustainable Portfolio Management in the Post-COVID-19 Era,” is a
collection of the recent development in green finance and Fintech, and their impact
on achieving sustainable finance, investment strategy making, and portfolio
management.
This book provides appropriate theoretical frameworks and the latest empirical
research studies in green finance, Fintech, and sustainable portfolio management. It
is written for academics, professionals, policymakers, regulators, and investors who
v
vi Preface
want to deeply understand the impact of green finance and FinTech on future
investment and financing strategies in a post-COVID-19 pandemic.
Riyadh, Saudi Arabia Nader Naifar

Al Ain, United Arab Emirates Ahmed Elsayed
Acknowledgments
To my father and my mother, my wife and my children, and to all my friends and
colleagues, Thank you for your support!
vii
Contents
Part I Green Finance, Sustainability, and Investment Strategies

Multicriteria Decision Analysis for Sustainable Green Financing
in Energy Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
K. S. Sastry Musti
The Development of the Global Green Finance Market: The Role
of Banks and Non-banking Institutional Investors . . . . . . . . . . . . . . . . . 27
Liudmila Filipava and Fakhri Murshudli
Corporate Social Responsibility and Bank Credit Ratings . . . . . . . . . . . 47
Laura Baselga-Pascual, Nebojsa Dimic, and Emilia Vähämaa
The Impact of Banking on Sustainable Financial Practices Toward
an Equitable Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Hazik Mohamed
Ethical and Socially Responsible Investments in the Islamic Banking
Firms: Heart, Mind, and Money: Religious Believes and Financial
Decision-Making in the Participatory Financing Contracts:Charitable
Donation Announcement Effect on Agents’ Level of Effort and
Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Anas El Melki and Hejra Ben Salah Saidi
Malaysia’s Sustainable Banking Regulatory Framework: Value-Based
Intermediation and Climate Change Principle-Based Taxonomy . . . . . . 125
Zuraida Rastam Shahrom and Sherin Kunhibava
Part II The Impact of Fintech and Investment Sustainability

The Impact of the Digital Economy Paradigm on Investment
Sustainability in Oman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Faris Alshubiri
ix
x Contents
The Sandbox in Saudi Arabia: A Regulatory Approach and

Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Amal Khairy Amin Mohamed
Risk Factors in Cryptocurrency Investments and Feasible Solutions
to Mitigate Them . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Harsh Jain, Shourya Rohilla, Dhairya Vakharia, Neeraj Gangani,
and Shalini Wadhwa
The Examination of Shariah Compliance of Equity Crowdfunding
Companies in Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Ahmad Hidayatullah and Burhan Uluyol
Fintech and Banking: An Indian Perspective . . . . . . . . . . . . . . . . . . . . . 261
Amarpreet Singh Virdi and Akansha Mer
Green Finance and Fintech: Toward a More Sustainable Financial
System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283
Sunanda Vincent Jaiwant and Joseph Varghese Kureethara
About the Editors
Nader Naifar is a Professor of Finance at the College

of Economics and Administrative Sciences at Imam
Mohammad Ibn Saudi Islamic University (IMSIU),
Riyadh, KSA. He teaches graduate and undergraduate
courses on Finance in Ph.D. Finance program, MBA,
EMBA, and Bachelor of Finance (BF) programs.His
current research focuses on, but is not limited to,
FinTech, Financial Economics; Sustainability; Islamic
Finance; Sukuk Markets; Green Finance; Default risk;
Global crisis; Contagion; Climate Finance, and Energy
markets. Nader Naifar has authored and co-authored
multiple papers published in reputable international
journals and has been a guest editor for several interna-
tional journals.
Ahmed Elsayed is an Associate Professor of Econom-

ics and Finance at United Arab Emirates University. He
is a core member of the Ethical Finance, Accountability
and Governance (EEFAG) center, a Research Fellow of
the SDGs Network, the Economic Research Forum, and
the Institute for Middle Eastern and Islamic Studies,
among other institutions. Furthermore, he is a Senior
Fellow of the Higher Education Academy and an Asso-
ciate Editor of the Research in International Business
and Finance and the Heliyon Business and Economics
journals.
His current research focuses on, but is not limited to,
FinTech and Cryptocurrency, Sustainable Finance and
xi
xii About the Editors
Financial Development, Financial Market Integration,

Financial Networks, and Islamic Banking and Finance.
Ahmed Hamed Elsayed has authored and co-authored
multiple papers published in reputable international
journals and has been a guest editor for several interna-
tional journals.
Part I
Green Finance, Sustainability,
and Investment Strategies
Multicriteria Decision Analysis
for Sustainable Green Financing in Energy
Sector
K. S. Sastry Musti
1 Introduction
Meeting the ever-growing energy demand has remained a major challenge to many
countries. While developed nations strive to achieve energy adequacy, developing
countries are trying to strike a balance between energy demand and supply. Capacity
addition in the energy sector is financially intense and even requires careful analysis
due to several risks involved. The major risk at the global level is the negative impact
of energy production and utilization on the environment. Many studies have pointed
to the need of combating the global warming, and energy sector is one of major
contributors. Concerted efforts are in place at all levels to reduce the global warming
by encouraging the use of environmentally friendly energy options. Green financing
in general is aimed at increasing the use of renewable energies and reducing the use
of fossil fuels. However, in the world of financing, needs of the fund seekers initiate
the dynamics of the well-known supply and demand game. Adequate energy
production and distribution are essential for social and economic growth of any
nation, and the study of financing in energy sector is always interesting. Due to the
contemporary climate policies and technological advances, green financing has
become an excellent landscape for researchers.
Energy markets are decentralized in many countries and thus electricity supply
industry (ESI) more or less consists of independent verticals (Lingyan et al., 2022;
Liu et al., 2020). The major ones are the generation companies (GenCos), transmis-
sion companies (TransCos), and distribution companies (DisCos). Though there are
several advantages of such decentralization, the major objective is to improve
technical and operational efficiencies of the individual verticals and also to encour-
age private investment in the energy sector (Jin et al., 2021; Managi et al., 2022).
Financing in energy sector can be a complex landscape to understand. Several
K. S. Sastry Musti (✉)

Namibia University of Science and Technology, Windhoek, Namibia
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 3

N. Naifar, A. Elsayed (eds.), Green Finance Instruments, FinTech, and Investment
Strategies, Sustainable Finance, https://doi.org/10.1007/978-3-031-29031-2_1
4 K. S. Sastry Musti
factors including, but not limited to policy frameworks, technical, social, and
financial aspects influence the state of ESI. It is usual to operate the sector with a
lot of debt and debt financing. Let us examine the South African ESI, as it serves as
good example for the scope of this chapter as there is a significant gap between
demand and supply and also investments into the ESI have been differed over the
years. As of now, global policies and South African national outlook do not entirely
favor the coal-based energy production. This points to the need of considering the
green financing avenues. According to a 2019 report (DPE, 2019), Eskom has a
long-term debt exceeding R441 billions (approx USD29 billions). Its financial ratios
clearly indicate that the financial debt and other challenges have been growing over
several years. In 2019, Eskom has reported an annual loss in excess of R20 billion,
and several municipalities were not able to collect the bills from the consumers
(DPE, 2019; Sastry, 2007). According to the GreenPeace study, generation compa-
nies are the worst hit financially as South African generation companies reported
heavy losses over successive financial years, 2018 and 2019 (GreenPeace, 2019). At
the same time, it is interesting to note that distribution companies have shown profits,
and transmission companies have done slightly better when compared to generation
companies. Added to this, the GreenPeace report clearly indicates that reasons for
such financial conditions of the organizations cannot be explained without informa-
tion. This clearly shows that cash flows have not been as expected and payment
delays and defaults have occurred. Hence, there are several conflicting and
supporting aspects to the green financing for ESI do exist. Stakeholders have their
own interests, and value chain gets influenced by several aspects.
Energy projects are financially intense due to inherent nature of essential needs
and high value chain engineering and social ecosystems. Most capacity addition
projects are typically planned over 20 or 25 or even 30-year horizon. Global trends in
climate policies explicitly encourage the of renewable energy technologies (RETs)
to reduce overall greenhouse gas emissions. However, capacity addition in any
segment be it using RETs and/or with fossil fuels takes considerable planning,
resources, and time (Dziugaite-Tumeniene et al., 2017; Sastry Musti et al., 2021).
For instance, the overall costs of RETs in the solar segment are very low; however,
solar firms need a lot of land to produce the same amount of energy when compared
to a thermal power plant. However, the average time to establish a solar power plant
is far lower when compared to a thermal plant. Similarly, it usually takes 10–15
years to establish a hydropower plant and requires significant amount of land as well.
Fossil fuel-based energy production also requires a lot of water for cooling and other
operations (Li and Huang, 2020; Sastry et al., 2013). Utilization of land for
establishing the power plants results in displacing a large number of people and in
some cases removal of forests. Thus, a conflict can be seen between the energy
generation for national needs and social and environmental interests. At the same
time, a lot of capital is required for establishing power infrastructure, and it is
common to seek loans for major international lending houses and/or through private
investors (Chen and Ma, 2021). However, most international funding agencies are
now obligated to provide funding for capacity addition projects and other energy-
related initiatives that are environmentally friendly (He et al., 2019; Azhgaliyeva
Multicriteria Decision Analysis for Sustainable Green Financing in. . . 5
et al., 2020). This results in a constraint that opposes the use of fossil fuels, though
some countries may have the natural resources. In other words, there is a nexus
between resources and needs that needs to be resolved through careful planning
(Chang & Starcher, 2019; Sastry Musti & Van der Merwe, 2022). As of now, no
research work has completely addressed the complexity and challenges in green
financing to energy projects. Thus, in the first instance, all the factors related to ESI
development need to be identified. Further, interdependencies and conflicting
aspects between those factors need to be identified as well. To address these gaps,
this chapter focuses on green financing in energy sector through elaborate discus-
sions on technical and financial aspects. For this, the chapter first takes up discussion
related to some selected, yet key needs, challenges, and risks in ESI. Challenges in
the decision-making processing will be illustrated. Then it deals with the possible
opportunities and the application of multicriteria decision methods (MCDM) for
making informed decisions specifically in the areas of capacity addition and risk
evaluation.
2 Literature Review
International climate policies, increasing awareness, and even falling prices of RETs
have prompted various nations to take up the path toward clean energy. United
Kingdom has taken a decision to close a few older nuclear power stations as part of
its clean energy initiatives. In its 2019 report, Eskom, the South African utility
recommended the decommissioning of its oldest coal-fired power stations
(GreenPeace, 2019). However, such initiatives need to be backed up with newer
energy production facilities that are environmentally friendly and also capable of
meeting the energy needs of the nation. Energy projects are financially intense and
thus require huge amounts of capital investments and of course timely and smoother
flow of funds to maintain the infrastructure. Since energy is related to different areas
such as economic development, social obligations, and industrial development,
research on the financial aspects is interesting. In fact, energy financing is a very
vast area and indeed complex various areas exist due to the logistics, supply chain,
market design, complexities conflicting, and interrelated aspects (Carfora et al.,
2021; Chen et al., 2019; Dutta et al., 2020). Some utilities have openly reported
the challenges related to managing the energy sector through comprehensive anal-
ysis, specifically pointing to the poor financial conditions, reducing revenues and
losses over successive years (DPE, 2019). Replacing the old, fossil fuel-based plants
with eco-friendly energy systems are quite challenging due to several reasons. Thus,
combating the global warming requires appropriate policy decisions at the highest
level and then resolving various technical and logistical complexities to push the
green initiatives forward.
With the recent developments in renewables and environmental conditions,
several countries are more inclined to add capacity in solar PV, wind, and other
renewable segments. However, such resources are dependent on local conditions and
have several technological challenges in delivering the energy to the end consumer.
Naturally, green financing is now becoming the norm due to changing policies and
frameworks in most countries. The major reasons behind this are the availability of
funding for green initiatives, falling costs of RETs, and proven track record of smart
grid technologies in cost savings and reduction of greenhouse gas emissions. Thus,
green financing can be sought in different areas—building new RE power plants,
development of smart grids, and/or transformation of legacy networks (Trinasolar,
2022). Financing such long-term green energy projects that too in large sums
requires a lot of information and careful planning (Musti, 2021; Sastry Musti
et al., 2021; Shiljkut and Rajakovic, 2015). Though there are several factors, actions,
and stakeholders that influence energy financing, a few of them are outlined below.
From the above discussion, on the policy front, major aspects are ability of the
ESI to uptake energy mix, support for smart grids, fair market conditions for IPPs,
appropriate policies for cost sharing based on their geo-location, fine turning of
policies related to Demand Side Management (DSM), Energy Efficiency (EE) and
Circular Economy (CE). On the operational front, independent variables also need to
be understood well. They include aggregated demand response of the system, energy
injected by the prosumers, consumer-initiated saving strategies, consumer migration
(due to the lack of employment and/or cost of living), power thefts, and nonpayment
of bills (Sastry, 2007). Figure 1 shows all of these in perspective to provide a
graphical illustration of major issues that will be taken up in this chapter for
discussion.
Risk evaluation is most important and central for any financing model. The
classical financing landscape uses the well-known credit score approach as it is the
single parameter on which both financiers and loan seekers keep a close watch.
Fig. 1 A schematic representation of a typical ESI with various actors, verticals, stakeholders, and
actions
Financiers would want their customers to have a healthy credit score as it represents
their repaying abilities. Also, financiers do expect a comprehensive and genuine
framework for the evaluation of credit score. Once the loan is granted, the financiers
would expect a free flow of information about the changing financial standing and
assured cash flows. In other words, financiers would want to understand the risks
before lending and try to establish and maintain the cash flows toward timely
servicing of the loan. Now the customers try hard to secure the loans to meet their
financial needs and generally try to maintain healthy credit scores to demonstrate
their good financial standing. At the same time, finance companies that almost act as
a bridge (or agents) between the financiers and the recipients will advise both parties
on various aspects—specifically the financiers on possible risks and terms and
conditions to the customers. And then, collateral arrangements have their own role
as permitted by the applicable legal framework. Green financing is no different from
the other forms of financing; however, the analysis related to risks involved,
challenges and opportunities to the stakeholders is of significant interest
(Azhgaliyeva et al., 2020; Hauwanga & Musti, 2022). However, the evaluation of
risks involved in energy financing can be quite broad subject. Risks can be associ-
ated with different aspects such as the national-level framework, current financial
standing of the stakeholders, abilities to make profits, abilities to payback, techno-
logical choices in selecting the RETs, and resource availabilities (Hashemizadeh
et al., 2021; He et al., 2019; Musti & Kapali, 2021; Şerban et al., 2016). For example,
if the national policy is not favoring the use of RETs, then there may not be any
scope at all for green financing. Similarly, if the national policy provides significant
levels of encouragement and financial incentives for DSM, EE and CE, then
consumers resort to reduce (or even avoid) the use of electricity and even may
shift to other energy options such as roof-top solar and/or water heating systems
(Goddin, 2020; Musti, 2020a, 2020b). This directly results in reduced incomes to the
utilities. However, CE, DSM, and even energy efficiency (EE) initiatives are key
elements of green initiatives, though they act in opposition to the interests of the
green financiers.
Typically, governments and regulators strive toward least cost capacity addition
to cut financial burden. However, aspects such as availability of resources for energy
production, continuous load growth, expansion of societies, changing policies due to
leadership changes will affect overall costs of energy projects. Though green
financing goes well with least cost planning strategies, earning models are subject
to several conditions as narrated above. Among the different energy resources, solar
photovoltaic (PV) is an attractive option for electric power producers when selecting
the most suitable RET to implement (Pitra & Musti, 2021; Dall et al., 2019). This is
because of its unique relationship to system integration, its decreasing cost, perfor-
mance improvements, and its huge unexploited resource potential. Thus, capacity
addition in the solar PV segment has gone up for obvious reasons. In many cases,
excess amounts of solar energy during peak hours can result in negative loading
conditions due to the fact that supply is far greater than the load itself. And this leads
to the formation of duck curve phenomena. Under this condition, energy from RE
plants is curtailed and thus resulting in loss of revenues to the IPPs. Least-cost
planning is always subjected to resolving the resource nexus, and thus, decision
making in picking the RETs is always complex as it is not entirely mathematical.
Risk assessment also involves several parameters that are cannot be measured
directly. MCDM tools provide an excellent avenue to deal with such complex
settings. Ekholm et al. (2014) have proposed MCDM methods to resolve climate
policy issues. Sastry Musti and Van der Merwe (2022) developed a simple
MS-Excel tool for selecting the energy mix. However, there is no simple MCDM
tool at present available to undertake risk evaluation. This chapter makes an attempt
to address this very gap.
DSM strategies encourage energy savings; installation of small-scale roof-top PV
systems with or without storage and solar water heaters. Regulators recommend
liberal financial incentives to the consumers who follow the DSM guidelines. Thus,
most modern consumers are transforming themselves into prosumers, and this
results in decrease in the energy consumption and this in turn results in revenue
loss to the utility. Thus, DSM nearly acts in opposition to load growth, and thus,
green financing strategies need to consider current DSM policies, demand response
in general, and also prospects for load growth. Due to environmental concerns and
steep reduction in the capital and levelized costs, renewable energies are popular
choice for capacity expansion. Utilities in most countries are allowing independent
producers to participate in their energy markets, more specifically in the solar-pv and
wind segments. Increasing penetration of solar-pv and wind has resulted in duck
curve phenomena, and many utilities have reported the technical and financial
challenges associated with duck curve phenomena. Typically, the off-taker will
curtail the solar-pv in-feed and continue to utilize base load plants. This poses
significant risks to the operations of IPPs. This aspect is now seen as major financial
threat, and this predominantly affects green financiers.
Energy market design greatly influences the wheeling and other infrastructure
usage charges Freytag (2020). Location of IPP, mode of loss allocation in the
network, and availability of single buyer will also influence the revenues of IPPs
(Liao et al., 2011; Hauwanga & Musti, 2022). Thus, investors and financiers need to
analyze present energy market designs, wheeling charges, and prospects of finding a
nearby single buyer to ensure financial inflows and revenues. Apart from the above,
several other challenges that are specific to a country’s socioeconomic conditions do
exist. Some of them include, but not limited to (1) absence of required frameworks
for green finance or finance to clean energies, (2) lack of internal data/information
systems, which may result in inaccurate estimations for setting national investment
policy, (3) absence of regulatory and legal framework directly related to green
finance, (4) lack of proper framework for energy transition toward clean energies
that might result in poor green project selection and management, (5) information
asymmetry at the capital markets, and (6) lack of analytical tools and expertise in
identification and assessment of green projects’ risks. Further, there may be a few
hard factors that can influence green projects. They include cheaper and guaranteed
energy imports from neighboring countries, lack of resources (such as land, water,
etc.) that may prevent capacity addition in large quantities, especially in the cases of
small island countries and/or land locked countries.
From the above, it can be seen that green financing is gaining lot of prominence.
However, there are several factors that have to be carefully considered in order to
ensure sustainable project progress and stable financial outlook. There are several
interdependent, cross-dependent, and mutually conflicting aspects that need to be
studied carefully and resolved through a structured fashion. Understanding and
analyzing the risks and applying the multicriteria decision methods to some of the
problems can provide successful pathways to reap the benefits of green financing
opportunities in energy sector. In this context, this chapter has the following
objectives:
• Qualitative and quantitative treatment of various factors related to green financing
• Challenges, risks, and opportunities for green financing.
• Application of MCDM for green capacity addition and risk evaluation
3 Identification of Needs, Challenges, and Risks in ESI
Energy need of the nation is the key most driver for sustained investments into the
ESI. To effectively manage the ESI, different stakeholders have different needs.
There are challenges and so are the risks. The subsections below discuss some of the
key needs, challenges, and risks.
3.1 Load Following Power Production
Knowing the varying load in real time and then adjusting the generation levels is an
operational requirement. Thus, load information is a need for the utilities. For this,
meters in different locations measure the key parameters and send to the central
facilities so that generation can be adjusted if possible.
The conventional, fossil fuel-based generation and load consumption patterns are
changing rapidly due to various reasons, but mostly due to the advent of smart
infrastructure being put in the place, in the immediate past. And this is true for many
countries even now, where little or no renewable energies are used. Typical (legacy)
generation and load profile are shown in Fig. 2. The hatched region indicates the
power generated and/or supplied to the feeder at a constant level of 780 kW
throughout the day. Load is varying according to the consumption patterns of the
consumers on the feeders. It can be seen that load consumption is not constant over
any given day.
The hatched region indicates the energy that is supplied, but not consumed.
Which means, utility did not earn any revenue for this energy that is supplied, but
not sold. This means revenues for a significant part of the energy are “lost.” A few
points should be noted here. (1) Generation levels are normally in mega-watts, and
this example has used kW only for illustration purposes and this means quantity and
Varying Load and Energy Unsold

1000
900
800
Unsold, unutilized energy
700
600
Peak load
500
400
300
200
Based load
100
0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Fig. 2 Daily load profile and energy supplied by a base load plant
costs of energy lost can be very high. (2) Load profile can be visualized typically for
a specific consumer, or for a feeder or even for an area such as a building or even a
city. (3) Load profile can be visualized for a day or for a month (with average values)
or for a year based on requirements. (4) Then consumption over the weekends and
holidays differ significantly from that of weekdays due to obvious reasons. (5) The
example uses a case of 11 kV power distribution feeder with a limited number of
consumers (peak load: 780 kW) in a small area. (6) Generation sources, especially
fossil-fuel based, base load generation facilities are from power distribution areas
where the end consumers are located. This means, there will be power loss over the
transmission lines while transporting the energy, which generally varies, but can be
safely assumed as 10% by taking the mix of high power and lower power distribu-
tion lines into consideration. (7) One important aspect about fossil fuel-based
generation is that every plant normally will have different generator units and
plant engineers do control the overall energy plant output based on the load forecast
and power dispatch information that is available to them. At the hindsight, it may
appear as though it is possible to reduce the unsold energy by switching off a part of
generation when not required. However, such a case is not possible as thermal power
plants cannot be switched off and on frequently due to ramp-up and ramp-down
constraints. Even otherwise, such switching on/off requires a lot of real-time infor-
mation and extensive computation.
From the above, it can be seen that nonrenewable energy plants such as coal,
nuclear and natural gas are normally used to supply the base load. These are base-
load plants that typically result in a significant amount of unutilized energy and also
contribute to greenhouse gas emissions. With the advent of smart grids and RETs, it
is possible to mitigate some of the problems. Now, let us examine the case of smart
grids with appropriate control technology. Smart grids have the ability to incorporate
Fig. 3 Energy mix with base load and solar plants
RETs such as solar and wind energies at various points in the power grid. Let us
consider a simple example of formulating an energy mix solution to a town with a
peak load of 390 MW at 13h00 (or 1PM) during the day and has a base load of
150 MW. Let us say a few more MWs of energy (say, 495 MW) is required to cater
to the power losses during the peak time. If the energy pool is designed in such a way
that only a coal-based power plant with a base generation of 495 MW, then a
significant amount of energy (except during the peak loading) will stay unutilized
and thus remains unpaid for. Such planning is not effective and not economical.
Since peak, in this illustration occurs as mid noon as in most cases, it is desirable to
consider building a solar farm as solar energy is available during those hours.
It is important to consider system losses and reserve energy. While system losses
(transmission, transformation, and other losses) generally go up to 9–12% depending
on various aspects, the reserve energy is generally planned at 10–15%. This means
base generation should be around 150 MW (of load) + 41 MW (losses plus
reserve) = 195 MW. This can be considered as 200 MW approximately. At the
peak, the generation should be 390 MW (peak load) + 105 MW (losses plus
reserve) = 495 MW approximately. Now an appropriate energy mix needs to be
simulated for this scenario.
There are many takeaways here. First, energy outputs of base load plant and the
solar energy plants are now mixed to realize the energy mix. Second, variations of
both energy and the load are now looking similar as shown in Fig. 3. This is what is
called load following energy production, as the pattern of overall energy production
closely matches with that of the load. Third, a portion of the load, specifically the
load during the peak hours, is now met by cheaper and environmentally friendly
solar energy. Lastly, solar plants are located closer to the grid when compared to
base load plants and this means, transmission lines losses are reduced as overall
flows are now less. Energy mix has several other advantages as well. It supports
localized IPPs and thus investor friendly. It also agrees well with the circular
economy principles.
However, it should be noted that this is only a simplified illustration to illustrate
the energy mix. In reality, several different costs and technical aspects need to be
considered. Given the intermittency nature of the solar energy, utilities need to
monitor the quality of the power delivered by the solar segment. In fact, regulator
usually sets the technical standards within which the IPPs need to operate.
3.2 Duck Curve
Conventional power plants contribute highly to the emission of greenhouse gases to

the atmosphere. In order to change this paradigm, power utilities are encouraged to
meet the electrical power demand by generating electricity from both conventional
and renewable energy technologies (RETs). Since costs of RETs have decreased
drastically in the recent past, a great deal of investments is being made in solar
segment (Chen and Ma, 2021; Giones et al., 2019). In many cases, excess amounts
of solar energy during peak hours can result in negative loading conditions due to the
fact that supply is far greater than the load itself. And this leads to the formation of
duck curve phenomena. This phenomenon is generally illustrated using a typical plot
of load and generation over a day and a pattern that is similar to a duck can be seen
(Pitra & Musti, 2021). Figure 4 shows a typical formation of duck curve condition as
result of varying solar PV penetrations over 4 years. In other words, the duck curve
phenomenon occurs when solar energy in higher quantities is integrated into the
power grid. This results in excess generation that cannot be delivered during peak
hours and a part of the load that cannot be supplied during off-peak hours.
Over the day, solar energy starts ramping up as the sun rises in the morning,
reaches its peak around mid-afternoon, and starts dropping as the sun sets in the late
afternoon. This declining power output in the late afternoon is usually accompanied
by a rising load, demanding an immediate supply of peaking power from fossil fuel-
based power plants or any other possible sources. Thus, the addition of high
penetration of PV to the power grid increases operational complexity and in fact
results in contrasting conditions of lower load demand during mid noon and higher
load demand in the evening hours (Dall et al., 2019). The net load, that is, the
difference between electricity demand and the portion supplied by PV power, is what
is referred to as the duck curve. System operators have two options—shutting down
either conventional, fossil fuel based (usually thermal) power plants, or the environ-
mentally friendly solar PV plants. However, this problem of negative load is only for
a few hours, about 3–4 h. It is not really possible to shutdown thermal power plants
due to ramping up and down problems. Obviously, this results in the curtailment of
solar PV for obvious reasons. It should be noted that, in most cases, the energy
supplied by privately owned solar PV plants. The energy from these plants is sold
typically through well-structured power purchase agreements that may not provide
Fig. 4 Duck curve phenomenon over the years with different levels of PV generation
flexibility to utility engineers in dealing with operating conditions. The problem

becomes much more complex if there are more IPPs with small capacities, engineers
need to have an approved process for applying the curtailment to certain plants,
and/or for taking a plant offline from the grid, etc. Thus, it can be seen that the
addition of excess solar energy than needed is the root cause of the problem.
3.3 Location of IPP
In most developing countries, energy markets are open to private investment through
well-defined market structure, policies, and power-purchase agreements. This natu-
rally results in a number of private investors operating simultaneously and thus
modern smart grids are typically energized by different IPPs with different RETs at
various locations. The power plants owned by IPPs are connected to the grid through
a metered point, or the PCC. Cash flows depend on the energy flows, which will be
measured by the meters at the PCC (Hauwanga & Musti, 2022).
Numerous technical challenges such as possible system faults and power quality
issues are associated with integrating the varying nature of solar PV and wind
resources. System faults need to be cleared by fast acting protection schemes that
can isolate the power plant from the grid to avoid possible damages on either side.
Both PV and wind power plants are known to produce harmonics and thus poor
power quality can render up to 15–20% of their energy useless. To deal with such
difficulties, policy frameworks specify the technical standards within which the IPPs
are expected to operate. Thus, the IPPs are expected to invest into appropriate quality
control infrastructure, real-time monitoring systems, and skilled engineers to meet
the set standards. Revenues for IPPs depend largely on the energy supplied, but
intermittency and seasons play their role in limiting the energy output.
Importantly, it is the responsibility of either local or federal governments to
acquire the land and issue lease-based ownership or land use licenses to the IPPs.
However, bit lots of land either for PV and/or wind can be provided outside urban
areas, thus plants owned by IPPs are far from the urban power grids. Power
transmission lines need to be run from the plant to the urban grid, and somewhere
in between a substation needs to be built, where the PCC is situated. For this, right of
way for the power corridor and also the land for the substation needs to be acquired.
Costs of such procurement and infrastructure development need to be factored into
the revenue estimates and risk assessments. In fact, PCC is the point where the power
from the independent power producer is transferred or sold over to the grid given that
it meets the quality requirements. Hauwanga and Musti (2022) stated that the PCC is
“the point in the electrical system where the ownership changes from the electric
utility to the customer The distances between IPP to the PCC and PCC to the grid
are often ignored in risk assessment.” Another aspect is that usually 8–12% power is
lost in transmission losses. These losses are significant, and in fact increase with
capacity addition through distributed generation. Losses depend on the lengths of the
transmission lines. It is important that the financial value of the losses needs to be
determined and then allocated to various stakeholders through the avenues provided
by the market design (Hauwanga & Musti, 2022). Further, financial costs involve
several parameters such as market models, cash flow structures, energy flows, and
losses, as the utility wants to absorb the losses in the section from PCC to the grid.
Revenues and other cost parameters are dependent on the distances involved, as the
power losses occur in in both the sections. If the distance between the power plant
and the PCC is more, then power loss in that section will be more (than the power
loss in the section owned by the utility) and naturally the IPP needs to absorb the
same. Thus, IPPs need a lot of information before they think of investing so that
informed decisions can be made (Giones et al., 2019; Hauwanga & Musti, 2022). It
is here, the government and the regulator play a vital role to see that all the required
information is provided for understanding the overall financial implications.
From the above, it can be seen that IPPs do need a lot of system data and
information before making their investment. Trinasolar (2022) clearly indicated
the importance of accurate data and information for various aspects of ESI
management—in developing energy policies, market design, costs and cash-flow
mechanisms, financial incentives, and penalties for various operating scenarios etc.
Otherwise, IPPs can be subjected to significant financial and legal risks. However,
there are other factors that also exist that can contribute to the risk, such as the
location of PCC (Hauwanga & Musti, 2022).
3.4 Policy Framework and Possible Contradicting Aspects
There are other factors as well that can potentially contribute to duck curve phe-
nomenon or the net negative load. Some of them include solar PV installations in
domestic, commercial, and industrial consumer segment. In other words, when
regular consumers turn into prosumers, load seen by the supplier goes down and
thus forcing the utility engineers to adjust the generation levels to suit the operating
conditions (Goddin, 2020; Musti, 2020b). This reduced load is the direct result of a
greater number of consumers turning into prosumers in a bid to cut down their own
energy bills by installing solar panels in their respective premises. It is important to
examine the reasons for increased number of prosumers and the overall possible
circularity in energy usage (Musti, 2020b). First state policies and incentives to the
citizens for using solar energy production, second, the higher energy prices, and
third frequent power shutdowns due to lack of adequate energy from the supply side.
Not just solar panels, even the addition of solar water heaters also results in
significant reduction in energy consumption and thus net load seen by the utility
goes down (Musti & Kapali, 2021; Şerban et al., 2016; Musti, 2020b). While it is not
possible to restrict the citizens in their choices for energy use, the utility certainly
needs to know the overall load, its trend over the day. The load curve is the typical
starting point that describes the overall demand. It is for this reason, energy audits
must be conducted to undertake physical verifications of consumer apparatus,
importantly solar PV panels and solar water heaters at the consumer premises to
provide the much-desired estimates for the overall load (Şerban et al., 2016). Such
information needs to be kept in a centralized facility so that different stakeholders
can use it to adjust their individual energy outputs in a transparent with manner
(IEEE Innovation, 2022b)
3.5 Energy Market Design and Operating Conditions
Most ESIs in the world are decentralized into different, independently operating
verticals—mainly as GenCos, TransCos, and DisCos. This results in resolving many
issues related to operating efficiencies, obscurity of information, and even the details
related to value chain. Value chain in ESI is mainly related to energy flows and cash
flows. Figure 5 illustrates that energy is generated by the GenCos, it is then sent to
TransCos, which then is sent to DisCos for distributing it to the consumers. Now,
consumers pay for the energy consumed to the DisCos, who will in turn pay to the
TransCos and then finally GenCos get paid. In the overall value chain, the energy
flows occur from GenCos to the consumers, whereas the cash flows occur in the
opposite direction. Typically, consumers pay at the end of the calendar month, but
meter readings will be considered during a set of specific dates, let say from 15th to
15th of successive months.
TransCos might get their payments in bulk, may be once in a quarter or
so. Similar arrangements may exist for GenCos to get paid. Issues related to non-
payments and delays can lead to breaks in the value chain for obvious reasons.
However, it should be noted that the technical standards for energy flows and
financial obligations for the cash flows will be set by the regulator. Enforcing the
set procedures in ESI is always a challenge just as in other sectors. This can happen
due to prevailing political, social, or economic conditions. It should be noted that the
value chain system illustrated in the figure is a simple model and in reality, the ESI
structure can be quite complicated. Government has the direct responsibility to set up
a level-playing field so that financial risks are reduced for stakeholders and the
Fig. 5 ESI verticals, energy flows, and cash flows

verticals. The job of the regulator is to enforce the set protocols and policies to ensure
the value system operates effectively.
4 Opportunities with Smart Grids
From the above sections, it is clear that advances in smart grids can provide several
opportunities. For instance, MCDM can be used to evaluate risk and energy mix can
be used to follow the load. However, timely switching on/off of the loads and energy
sources is possible only with real-time monitoring and control. Conventional grids
cannot achieve such a monitoring and control. However, by using smart grids, it is
possible to accomplish real-time monitoring and control, and thus load following
feature.
Smart grids support several state-of-the art technological options such as inte-
grating a diverse energy portfolio and consumers using the power networks that
centrally monitored and controlled in real time. Apart from this, smart grids can
potentially result in wide ranging benefits. In an article titled, “3 Real-Life Examples
of the Positive Impact of Smart Grid Data Analysis,” IEEE Innovation (2022a)
states that
The Boston Consulting Group found that an energy retailer was able to boost its gross
margins by more than 20% by creating detailed customer profiles using multiple sources of
data to guide pricing increases, targeting those likely to pay and avoiding those at high risk
of churn.
Florida Power and Light was able to use grid data to monitor the status of their grid and
operations (particularly from their smart meters) to gain $30 million in operational savings.
Norway has reached the epitome of clean energy, with over 96% of electricity produced
from hydropower, and a goal of selling no fossil fuel-powered cars by 2025. The country is
on its way to being the first fully renewable energy-powered nation and is reaping significant
benefits like more efficient energy generation, new jobs in the renewables sector, improved
consumer choice in energy, and reduced carbon footprint.
However, a majority of the power transmission and distribution networks are

more or less existing and functioning across the globe, though several more net-
works are expected to be added. The smart grid control technologies can be easily
adopted while developing the newer networks. On the other hand, the major
challenge is to transform the existing legacy networks into modern versions so that
they can be part of smart grids.
Smart grids essentially operate on the information that is collected from the
meters in various places in real time. A lot of computational and digital storage
infrastructure is required for effective management. Thus, existing networks require
transformation in two ways—removal of obsolete infrastructure and addition of
state-of-the-art infrastructure. Such a transformation is imperative to realize the
benefits such as those indicated above. Cost of such transformations can be prohib-
itively expensive given the vastness and geographical spread of the power networks.
The major question is how to secure green financing for modernization of the legacy
networks. However, this challenge can be considered as an opportunity if the energy

policy can be modified to incorporate in smart grids and timely transformation of the
legacy grids into smarter versions. Such a policy shift naturally attracts international
funding agencies, as it would help the utility to make higher revenues and profits.
4.1 Application of Multicriteria Decision Methods
Application of MCDMs to various aspects of energy systems is of significant

interest. MCDM tools have become a standard choice where participating variables
are dissimilar from one another (Sastry Musti & Van der Merwe, 2022). In this
section, the tool developed by Musti (2021) is used to apply standard MCDM
methods to the problems of energy mix and risk evaluation. It should be noted that
problem formulation can be different ways with different variables with varying
degree of impact. The tool itself is versatile as it allows the users to change the
variables and weights.
4.2 Energy Mix
As of now, different renewable energies are available and each of them having their
own costs, advantages, and disadvantages. Social, economic, and environmental
impacts of renewable energies are always of significant interest to contemporary
researchers. In the modern era, demand response needs to be understood well for
planning the energy mix (Musti, 2020a; Sastry Musti et al., 2020). And proportions
in energy mix invariably depend on merits of different energy resources. Just as any
other example, choosing a renewable energy for a specific purpose also involves
both measurable and nonmeasurable attributes or criteria in the decision-making
process. Naturally, several researchers have applied MCDA methods to renewable
energy selection. This case study considers few of the well-known attributes—
levelized costs of production per megawatt hour, land usage in acres, environmental
friendliness, and capabilities of load following. Realistic values for these parameters
have been chosen from reputed references.
Both the attributes energy production costs and land usage values are measurable.
Costs of energy production and land usage values are obtained from standard data
repositories (Sastry Musti & Van der Merwe, 2022). Then the rest of the two
attributes are nonmeasurable directly. Hence, numerical values on a scale of 1–10
are given to both environmental friendliness and load following capabilities, based
on the known information. Few points should be noted beforehand.
This only a simple, entry level example on selecting a renewable energy resource,
as the emphasis is more on using MS-Excel tool and applying the MCDA tech-
niques. In a real-world setting, there will be several different expenses in energy
systems from generation point to the end use. Costs of energies vary from place to
Table 1 Default input data for renewable energy selection

Total cost Land required Env. friend. Load follow
Solar PV 88 44 10 2
Wind 91 71 9 4
Coal 112 13 2 9
Natural gas 152 14 3 9
Nuclear 136 15 2 9
Table 2 Overall rankings of renewable energies from different MCDM

Rank Weighted sum Weighted product WASPAS Topsis
1 Solar PV Solar PV Solar PV Solar PV
2 Wind Wind Wind Wind
3 Natural gas Natural gas Natural gas Coal
4 Coal Nuclear Nuclear Nuclear
5 Nuclear Coal Coal Natural gas
Table 3 Input data with high weighting for load following capabilities
Cost Land usage Env. friend. Load following
Solar PV 87 43.5 8 3
Wind 90 70.64 8 3
Coal 110 12.21 1 8
Natural gas 150 12.41 3 10
Nuclear 135 12.71 2 9
place due to local environmental conditions, sages to staff and even cost of con-
struction etc. (Sastry Musti & Van der Merwe, 2022). Values of the input parameters
used for the selection of energy type are shown in Table 1.
With the above data set, all the MCDA methods should be independently
executed and the corresponding output shows that solar PV which has the least
cost ($87) is ranked as the best one by all methods, and there are other reasons as
well including high rating given in Env. Friend. category. Solar PV which has the
weightage (a beneficial criteria) is ranked as the best one by all methods and overall
rankings are shown in Table 2.
Now let us consider that cost is not a prominent attribute, but load following
ability is more important, and that the cost and land usage may not be very critical.
This may be justified in a location where critical, industrial, and commercial loads
exist. To try this option, changes are made in such way that the attribute for the Load
follow is now increased to 0.5 and the rest are reduced, while ensuring the sum of the
weights of all the attributes is one. Since the tool is user-friendly, it is possible to
change the data on the cover sheet and then carryout the computations in all the rests
of the sheets. The changed inputs and the corresponding outputs are shown in
Tables 3 and 4.
Table 4 Overall ranking with high weighting for load following capabilities
Rank Weighted sum Weighted product WASPAS TOPSIS
1 Natural gas Natural gas Natural gas Coal
2 Nuclear Nuclear Nuclear Solar PV
3 Coal Coal Coal Nuclear
4 Solar PV Solar PV Solar PV Natural gas
5 Wind Wind Wind Wind
And the corresponding output shows that all the methods identified natural gas
(also known as the gas peaker) as the best, except the TOPSIS which picked the coal
as the best. It also ranked natural gas and wind at the bottom, though weights are in
favor of Env. Friend attribute. As explained earlier, it is the way TOPSIS carries out
the computations based on Euclidian distances that are different from the rest of the
methods, and thus the results will be different from the rest. As explained earlier, this
is an example to demonstrate the distinctive features of different methods and also to
attest the fact that all the methods do not give same results, though same input data
sets are used.
4.3 Risk Evaluation
Just as any other financing models, investors would like to study various risks
involved and especially want to understand the prospects for handsome and timely
returns. Since there are several stakeholders with different interests and require-
ments, decision making can be very difficult to ascertain such prospects. Thus, this
problem warrants the application of MCDM. For this, the entire ESI can be divided
into five (5) different verticals—viz., GenCos, TransCos, DisCos, combination of
these three verticals, and then finally the anciallary services. Possibilities for invest-
ment in four verticals are already discussed earlier. Ancillary services in the ESI are
critical in the modern day context as specialized services such as reactive power
injection, voltage control, and energy storage provisions can be offered by indepen-
dent firms. Almost all ESIs encourage private firms that specialize in ancillary
services to cut costs in procuring specialized equipment and to employ skilled
engineers. Now the green investor has options to invest in any of the three verticals
and also in the combination of these three and then also in investing into exiting
ancillary service firms.
Similarly, let us consider four major categories, viz., profits made, current state of
the technology in terms of smart readiness, existing environmental policy, and
current level of solar penetration for evaluating the risk. Higher profits indicate
financial stability and urge to take the loan is lower. Thus, this parameter is set as
nonbeneficial one. In other words, if a vertical is making high profits, then it may not
need the loan in the first place. There may be several reasons for lower profits such as
failures in value chain system and current policies, and these can be possibly
Table 5 Input data with high weighting for risk evaluation for investments into various verticals
Ben 1/Non Ben 0 0 1 1 0
Weightage 0.3 0.2 0.4 0.1
Investment area Profits Smart ready Env Policy Solar part
GenCos 5 10 9 2
TransCos 25 15 6 3
DisCos 55 20 4 5
Combined 65 30 5 6
Ancillary Services 75 60 8 9
Table 6 Overall ranking with high weighting for policy and smart technologies
Rank Weighted sum Weighted product WASPAS Topsis
1 GenCos GenCos GenCos GenCos
2 Ancillary Services TransCos Ancillary Services TransCos
3 TransCos Ancillary Services TransCos DisCos
4 Combined Combined Combined Combined
5 DisCos DisCos DisCos Anciliary Services
changed through mediation and consolations. Higher smart readiness indicates the
higher technological strength, and thus higher prospects for servicing the loan. This
is set as a beneficial parameter, which means higher the value, better prospects in
servicing the loan in a timely manner. Similarly, the environmental policy parameter
is set to a beneficial one. Higher the value means, the current policy supports green
initiative and the market is ready for uptake of green energy. Lastly, the variable
solar part indicates the current level of solar energy penetration. Higher the value
means, the ESI already has a lot of solar energy thus solar segment may have been
saturated. At this point, adding more solar energy does not yield good returns due to
duck curve phenomenon as explained earlier. Thus, this is set as a nonbeneficial
parameter. Now, assume that the ESI has the values as shown in Table 5. Using the
MCDM tool, it is possible to resolve the decision-making problem into a hierarchy
of preference for green investing. Weightages have been considered as explained in
the earlier illustration. Since high green policy is critical for investments, it is given
higher weightage.
After applying the MCDM, the tool gives the following output as shown in
Table 6.
It can be seen that a good financial standing and smart readiness aspects generally
favor green investors. It should be noted that this is a simple example and is not a
comprehensive solution. The aim here in this chapter is to provide a basis and
foundation for using MCDM to various problems in the area of green financing.
5 Discussion
Globally and locally several ESI players exist. They include international commit-
tees that monitor climate changes carbon emissions and major greenhouse-gas
contributing nations. Policies of some developed nations on climate change can
also be significant players. International monetary funding organizations, other
lenders, and Banks also have their role in influencing recipient Nations also Anita
the implementation process of climate policies. Technology investors and devel-
opers and other stakeholders also some of the key players. State governments
themselves are key players in their respective energy supply industries. Utilities
and regulator have their own role to play, though utilities are mostly controlled by
the regulator within a well-defined policy framework. Lastly but not the least, the
consumers are also key players as they are the ones who pay for the energy that they
consume. Table 7 summarizes some of the needs, requirements, and challenges of
various actors and stakeholders in any modern day ESI.
The above sections and illustrations show the use of MCDM to resolve several
conflicting and interdependent issues. Due to the given complexity, the above
example and MCDM approaches need to expand appropriately and thus there are
several opportunities for further work to develop new algorithms and risk assess-
ment. Most of the parameters and aspects from above sections, in fact, vary dynam-
ically. Such variations impact energy flows and cash flows in different ways. Further
works should also consider these parameters in a dynamic sense, let us month-wise
or annually etc., and carryout investigations.
6 Conclusion
Green financing is becoming more and more popular in energy sector. This chapter
presented a few key issues in terms of needs, challenges, and risks in ESI. Then
opportunities in terms of using smart grids, determining a suitable energy mix and
need for policies, have been discussed. Applicability of MCDM is demonstrated
using a MS-Excel tool for risk assessment of energy projects for green financing.
Adopting the global green initiative at the national level is now becoming an
imperative to every nation as part of benign fight again the unwanted climate
changes. The chapter clearly points to the need to establish a national level green
energy policy at the national level, use of energy mix, and smart grids for the green
cause. Importantly, a well-defined framework for green energy policy is essential to
ensure sustainable operation of ESI and adequate opportunities to the green
financiers.
Table 7 Summary of needs and requirements of various actors and stakeholders of ESI
Actors and stakeholders Needs, requirements, and challenges
Agencies monitoring climate International agencies and some developed nations tend to
change, developed nations, and monitor the climate change is very closely and work toward
policy-making organizations reducing greenhouse gases. Such players usually bring pres-
sures on state governments specifically at the top leadership
positions. Such efforts are generally channeled through
international-level climate agreements and meetings
Funding agencies and banks International our cross-border funding agencies to put various
restrictions in their energy financing frameworks as they
themselves are influenced by committees that monitor climate
changes. This means that funding for fossil fuel-based energy
production may not be favored. This intern can result in lesser
availability of baseload energy production in respective ESIs
ESI Technologies Recent technological advances and developments by and large
have resulted in cheaper environmentally friendly renewable
energy technologies. For instance, the levelized costs of solar
and wind energies have been reduced drastically over the
years. However, the random nature and intermittency of such
resources pose significant challenges in utilizing the energy
produced
Investors and developers Investors and developers in energy supply industry do expect
returns on their investments. Investor-friendly energy markets
benign policy frameworks to ensure returns and timely pay-
ments from the consumers or some of the factors aspects that
investors anticipate. Importantly, they expect the ESI to utilize
and operate on energy mix (and not just one form of energy
source)
State and federal governments Both state and federal governments expect funding agencies
and banks to provide loans with low interest rates and longer
durations for repayment. Developing and underdeveloped
nations expect the developed nations to provide them with the
niche technologies required for integrating intermittent
renewable energy sources, at affordable prices
Utilities Utilities would expect policy support to build and develop base
load plants to meet varying load conditions in a safe and
reliable manner. They also expect the regulator to understand
their financial budgetary requirements in managing their own
operations, as capex and opex in ESI can be cost intense
Consumers Consumers expect reliable and cheaper energy supply
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The Development of the Global Green
Finance Market: The Role of Banks
and Non-banking Institutional Investors
Liudmila Filipava and Fakhri Murshudli
1 Introduction
The popularization of “green” ideas contributes to the globalization of green finance

(Nedopil et al., 2021), causing the compliance of the financial institutions’ activities
with the principles and Goals of Sustainable Development (SDGs). Since the main
contribution to green investment, including renewable energy and other low-carbon
projects, is provided by bank lending, the banking sector plays a significant role.
According to Runyon (2016), bank lending accounts for 70% of debt and 50% of
total sustainable financing. The Green Banking system includes actors at the inter-
national level within the framework of the Global Alliance for Banking on Values
(GABV). Commitment to environmental issues is now a part of the overall banking
strategy and corporate governance, from environmental audits to including ESG
factors in risk management (WWF, 2014). Bank’s interest in green finance, among
other reasons, is explained by the possibility of obtaining reputational benefits and
competitive advantages in the market (UNEP, 2015a), especially in new green
sectors of the economy.
The Global Green Finance (GGF) market currently sees the rapid growth of
numerous informal private alliances and initiatives. For example, the Sustainable
Banking and Finance Network (SBFN) brings together banking regulators and
banking associations of private financial institutions. Other examples include the
Sustainable Stock Exchanges Initiative (SSE), the Financial Centers for Sustainabil-
ity Network (FC4S), the Sustainable Insurance Forum (SIF), the Principles for
L. Filipava (✉)
Belarusian State University, Minsk, Belarus
e-mail: filippovale@bsu.by
F. Murshudli
Azerbaijan State University of Economics, Baku, Azerbaijan
e-mail: is.mal.merkezi@unec.edu.az
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 27

N. Naifar, A. Elsayed (eds.), Green Finance Instruments, FinTech, and Investment
Strategies, Sustainable Finance, https://doi.org/10.1007/978-3-031-29031-2_2
28 L. Filipava and F. Murshudli
Sustainable Insurance (PSI) Initiative, the Sustainable Insurance Initiative (PRI), and
the Principles for Responsible Investment (PRI). The concept of blended finance,
involving the attraction of private sector capital to achieve the SDGs, is becoming
increasingly relevant. This approach can also be used to mobilize capital from small-
and medium-sized investors through the use of digital finance. In order to achieve
this, at the annual World Economic Forum in Davos (2007), the Green Digital
Finance Alliance (GDFA) was launched, which, together with UNEP, implemented
investment attraction mechanisms to finance low-carbon industries.
However, the implementation of long-term green projects in emerging countries
is limited by the insufficient development of appropriate green financial mechanisms
and instruments. At the same time, the transition to a global low-carbon sustainable
economic model in low- and middle-income countries provides for the financing of
USD1.6 trillion annually (WB, 2019). Achieving this would require the banking
sector’s active participation and the attraction of entrepreneurial capital. Therefore,
the purpose of this study is to consider current trends in the GGF market to develop a
financial mechanism based on a green fund establishment with the subsequent
securitization of its assets through the issuance of green bonds and the attraction
of private capital to the projects that meet the principles of the green economy.
2 Understanding Sustainable and Green Economy:

Literature Review
2.1 Green Economy as an Integral Part of Sustainable

Development
In the scientific community, there is often a divergence of views on the term

“sustainable development.” Many scholars interpret it in the context of economic
growth based on an increase in GDP. Likewise, the global economy requires a
harmonious and balanced development of three components: economic, social,
and environmental. Thus, achieving long-term sustainable economic growth is
impossible without considering social and environmental factors (Agenda 21, 1992).
The concept of sustainable development was initially introduced in the report
“Our Common Future,” prepared by the UN World Commission on Environment
and Development in 1987. According to the G. H. Brundtland definition, sustainable
development
meets the needs of the present, but does not compromise the ability of future generations to
meet their own needs [quoted by UN (1987)]
This term was recognized by numerous countries at the United Nations Confer-
ence on Environment and Development in 1992 as part of the process of adopting the
Framework Convention on Climate Change (UNFCCC). The convention’s purpose
is to implement the concept of global sustainable development by countries. As a
result of globalization and the growth of the TNC’s influence, the primary vector of
The Development of the Global Green Finance Market: The Role of Banks. . . 29
Table 1 The green economy forms

Green economy
Cyclic Blue
Low carbon Bioeconomy economy economy
The efficient use of energy resources
Widespread use of renewable energy sources —
The minimization of the use of traditional Sustainable The extension of the life
hydrocarbons agriculture cycle of the resources
(products) used
— The efficient use of waste
Source: Compiled by the authors
the concept shifts from the national level to the corporate one, as evidenced by the
growing number of private initiatives in the sphere of sustainable development and
green investment.
The world community adopted the 2030 Agenda in 2015 (UN, 2015), which
includes 17 global Sustainable Development Goals. The new SDGs are consistent
with international law, consider national characteristics, opportunities, and priorities,
are comprehensive, and ensure a balance between all three components of sustain-
able development: economic, social, and environmental. Achieving the sustainabil-
ity goals is expected to contribute to the transition to a new economic model—a
green economy model (Grabowska et al., 2022).
Indeed, the transition from a traditional economic growth model to a “green” one
is becoming a worldwide trend. A green economy is a tool for achieving sustainable
development, aiming to increase people’s well-being while reducing environmental
risks (UNEP, 2015b). As already mentioned, the foundations for a green economy
were laid within sustainable development in the late 1980s. The term “green
economy” was first mentioned in ‘Plan for a Green Economy’ (Pearce et al.,
1989), highlighting the need for economic support of the environmental policy. In
subsequent works, researchers touched upon issues such as climate change, ozone
layer depletion, deforestation in tropical regions, etc. (UNDESA, 2012).
Since the mid-2000s, within the framework of implementing the global strategy
for sustainability, new models of the GE have become widespread: low-carbon,
bioeconomy, and blue economy (European Commission, 2018, 2020, 2022).
Although these concepts are often considered identical (since the principle of
environmental orientation can be found in all models), they have specific differ-
ences. The general and characteristic directions of developing modern GE forms are
shown in Table 1.
The low-carbon economy strives to reduce greenhouse gas emissions into the
atmosphere to stabilize the climate system (Solomon et al., 2007). Low-carbon
development is primarily associated with improving energy efficiency, such as
minimizing traditional hydrocarbons, primarily coal (Flavin, 2008), and using
renewable energy sources. The bio-economy involves transitioning to a new
technological paradigm based on energy efficiency and biotechnology, involving

renewable biological raw materials to produce energy. Bioeconomics is also asso-
ciated with sustainable agriculture, organic food production, and the efficient use of
waste. A circular (cyclic or closed-loop) economy involves reusing materials and
resources, their regeneration, restoration, and optimization to preserve the environ-
ment. The circular economy is based on resource efficiency and the producer’s
responsibility to reduce the environmental footprint of manufactured products
(Stahel & MacArthur, 2019). The blue economy was first formulated in 2009 by
Gunter Pauli (2010). It enables society to obtain value from the oceans and coastal
regions whilst respecting their long-term ability to regenerate and endure such
activities through implementing sustainable practices (The EU Blue Economy
Report, 2022). New hybrid forms, such as the circular bio-economy, are also
emerging.
Thereby, the green economy:
– is democratic and strives for the rule of law based on the principles of equality,
responsibility, transparency, stability, and intergenerational justice (UNEP,
2011);
– is a means of achieving sustainable development (Bobylev, 2017), which
assumes the assessment of not only economic but also social indicators (poverty
reduction, ensuring the population’s well-being, social protection, and essential
services access) (Lindenberg, 2014) as a result of the implementation of resource
and energy efficiency policies;
– strives to protect biodiversity and ecosystems.
The fundamental principles of a green economy (i.e. peaking, climate neutrality,
voluntary cooperation, adaptation, transparency, and a global “stocktake”) are laid
down in the Paris Agreement (UN Framework Convention on Climate Change).
Furthermore, the goals, objectives, and requirements for participants are designed to
last until the end of the twenty-first century (UNFCCC, 2015).
The cooperation of the G20 countries has reached a significant level within the
G20 Climate Finance Study Group framework and the Task Force on Climate-
related Financial Disclosures (TCFD). Furthermore, the informal green associations
in the corporate and financial sectors are represented by mutual obligation platforms,
joint industry initiatives, and lobby groups. Their priority areas of activity are
developing dialogue and cooperation in green finance, assisting effective financial
instruments used to stimulate climate-friendly projects, and mobilizing private
investment to accelerate the global “green” transformation (Table 2).
The central idea of global cooperation is the search for solutions to international
(regional, national) climatic and environmental problems through the tools of the
global financial market and the “greening” of the world financial system.
Table 2 Informal green initiatives

Initiative Corporate sector Financial sector
Mutual Primary purposes: harmful emissions Primary purposes: investment portfolio
Obligations reduction, energy efficiency, renewable decarbonization, carbon footprint mea-
Platforms (alternative) energy sources for the own surement, the development of tools for
needs use, hydrofluorocarbons (HFCs) climate and carbon risks’ analysis
reduction when making investment decisions
Initiatives: Science-Based Targets Ini- Initiatives: Climate Wise Principles,
tiative, RE100 Initiative, WWF’s Cli- Investor Platform for Climate Actions,
mate Savers, Oil and Gas Climate RiSE, Montreal Carbon Pledge, CDP’s
Initiative, Consumer Goods Forum’s, Carbon Action Initiative, Principles for
Sustainable Refrigeration Resolution, Responsible Investment (PRI)
Refrigerants Naturally!
Joint Indus- Primary purposes: the development of Primary purposes: the distribution of
try industry transition roadmaps (ITRs) to green bonds to stimulate investments in
Initiatives limit global warming to 2 °C, support low-carbon projects, reports publica-
the transformation to the low-carbon tion containing environmental data
emitting technologies (LCET), imple- Initiatives: Portfolio Decarbonization
mentation of the public–private part- Coalition. Banking Environment Ini-
nerships (PPPs) environmental tiative’s Soft Commodities Compact,
protection projects Low Carbon Investment Registry, Cli-
Initiatives: International Air Transport mate Bonds Initiative, Green Bonds
Association’s 2020 and 2050 Emission Principles1101 in a 100 Initiative,
Targets, Cement Sustainability Initia- Ceres’ Investor Network on Climate
tive, International Road Transport Risk (INCR), Ceres’ Shareholder Ini-
Unions, 30 by 30 Resolution, Lighten tiative on Climate and Sustainability
Initiative, Tropical Forest Alliance (SICS)
2020, Consumer Goods Forums, Zero
Net Deforestation, World Business
Council for Sustainable Development
(WBCSD) Low Carbon Technology
Partnership Initiative (LCT Pi)
Lobby Primary purposes: the development of Primary purposes: the development
groups an international framework agreement and implementation of norms and
(IFA) and policies to achieve SDGs standards for the low-carbon projects
Initiatives: We Mean Business Coali- finance
tion’s International Policy Support Initiatives: Global Investor Coalition
Statements, CEO Climate Leaders on Climate Change, Institutional
Statement, World Bank Carbon Pricing Investment Group on Climate Change,
Leaders Coalition, Caring for Climate 2 Degrees Investing Initiative, Climate
Business Leadership Platform, Ceres Wise, Investor Working group on Cli-
Business for Innovation Climate and mate Corporate Lobbying
Energy Policy (BICEP), The Prince of
Wales’s Corporate Leaders Group
2.2 Conceptual Approaches to the Definition of Green

Finance
Sustainable finance is an integrated approach that combines different strategies to

improve the social, economic, and environmental indicators of the financial system.
Green finance appears to be a part of the strategic agenda for sustainable finance.
In modern practice, there are two main approaches to the definition of green
finance. In the broadest sense, this is an investment in the development and
implementation of (1) programs in balanced environmental management (for exam-
ple, water resources management, soil protection, and biodiversity conservation)
(Daily & Ellison, 2003; Makower & Pike, 2008); (2) ecological projects
(in particular, to reduce greenhouse gas emissions and adapt to climate change
(climate finance) (UNEP, 2011); (3) and industries focused on measures to improve
processing, recycling of resources and support for renewable energy (low-carbon
finance). This approach is implemented within a closed-loop economy at the macro
level, which provides for the repeated use of resources through their regeneration,
restoration, and optimization while preserving natural environments. The narrow
approach (Krugman, 2010; Lindenberg, 2014; Mazzucato & Perez, 2014) implies
the implementation of environmentally friendly investments and low-carbon tech-
nologies, projects, industries, and enterprises based on appropriate financial tools
and products used in making decisions on loans, monitoring, and risk management.
The term “green finance” was initially proposed in 1992 by the American
economist Richard Sandor and was envisaged mainly as an investment for climate
change (Sandor, 2012). Over time, this term started to be used with a narrower
meaning, implying projects and programs to ensure mitigation and adaptation to
climate change. Currently, there are concepts of sustainable investment, low-carbon
finance, circularity finance, impact finance, and ESG finance.
Responsible investment has become widespread, which involves considering
environmental, social, and managerial factors. It aims to bring economic and
social/environmental benefits, referred to as targeted social investment (or impact
investing). In 2006, the Responsible Investment Association (RIA), with the support
of the UN, developed six basic Principles for Responsible Investment (PRI, 2018).
These Principles are voluntary initiatives in which companies consider environmen-
tal and social projects in their investment strategy.
In today’s conditions, “brown” (“gray” or “dirty”) investments appear to be
opposed to “green” ones. A comparative analysis of “green” and “brown” financing
is presented in Table 3. Green finance usually involves a different verification stage
for compliance with “green” requirements and standards and the provision of
appropriate reporting.
Therefore, the term “brown financing” is used in the context of projects
implemented in “traditional” spheres of social and economic infrastructure without
a claim to environmental friendliness. Meanwhile, international organizations
refused to identify priority sectors or activities that fall under the definition of
“green,” noting the multidisciplinary nature of green financing.
Table 3 Comparative analysis of “green” and “brown” finance

Criteria ‘Brown’ finance ‘Green’ finance
Sectors of the econ- Economic and social Renewable energy, water supply, and sew-
omy (or types of infrastructure erage, organic agriculture, sustainable forest
activities) management, waste disposal, pollutant
elimination
Sources of financing Traditional credit and “Green” financial instruments (green loans
financial instruments and bonds)
Participants Banks and non-banking Green banks, WB, RDBs, etc.
financial institutions,
TNCs, etc.
Project selection Economic and/or social Environmental friendliness
criteria efficiency
Features of project Investment and industry Investment and industry risks, additional
implementation risks verification tools for environmental
compliance
3 The Current Trends in the Global Green Finance Market
3.1 Green Economy Financing Instruments
The following instruments have become widespread in the GGF market: green
(sustainable, climatic, and collateralized) bonds, green (eco-) loans, and weather
derivatives. These financial instruments are not fundamentally new from a technical
perspective, but they are distinguished by the environmental component.
Green bonds (GBs) are used to finance projects that meet the criterion of
environmental friendliness [projects in energy saving, energy efficiency, renewable
energy, etc. (UNEP, 2016)]. Most GBs are subject to special labeling requirements,
and the issuer or an independent appraiser can perform the labeling. According to the
International Financing Corporation (IFС) definition, a green bond is a bond that
meets the following criteria: (1) attracted capital must be directed to the green
projects’ implementation, (2) investments must be assessed for compliance with
eco-principles, (3) the funds attracted by the issuer are exclusively targeted, and
(4) information on the funds spending is transparent and should be published
annually (IFC, 2020). The priority areas of the GBs are energy efficiency (38%),
sustainable low-carbon transport (16%), water resources (14%), adaptation to cli-
mate change (6%), and forestry and agriculture (2%). This is because countries
primarily issue GBs to invest in water supply and sanitation. This trend is typical for
developed countries (USA and France).
Within the described terminology, the broadest definition of green or so-called
climate-aligned bonds (CABs) was proposed by the Climate Bonds Initiative (CBI)
to designate financial instruments for low-carbon and climate-resilient infrastructure
development. The World Bank also defines GBs, as implementing a program to
finance environmentally sustainable growth in emerging countries.
Green bonds were issued for the first time by the European Investment Bank
(EIB) in 2007, called climate awareness bonds (CABs). The issue had a volume of
USD600 million and received an AAA rating (European Commission, 2016). The
bonds were intended to finance renewable energy projects. In 2008, the IBRD issued
bonds labeled as “green.” The World Bank applied environmental criteria, and an
independent assessment carried out by experts from the University of Oslo to select
appropriate projects. The funds from the placement of GBs in the amount of SEK
2.85 billion were used to finance agricultural, waste processing, and forest manage-
ment projects (WB, 2015).
The need for standardization and labeling of green bonds arose from the neces-
sity to identify their specifics in the financial market. Until recently, the lack of
investor interest in green financial instruments was caused not only by profitability
requirements but also by the lack of recognized standards and an efficient interna-
tional mechanism to control the cash flows.
The initial stage in the GB standardization can be considered the adoption of the
Wind Criteria (or Wind Sector Eligibility Criteria) of the Climate Bonds Standard,
developed by the CBI in 2011. Furthermore, CBI has approved four industry
standards (version 2.0) for wind and solar energy, low-carbon public transport,
and energy-efficient buildings. Version 2.0 also includes a description of the certi-
fication process, requirements for issuers, and the GBs industry standards. The
principles of green bonds were improved simultaneously (CBI, 2018a).
In 2014, the International Capital Market Association (ICMA) released the Green
Bonds Principals (GBPs), which are similar to the CBI Standards but address
broader issues. The GBPs provide guidelines for issuers to disclose information
about the upcoming GB issue, allowing investors and stakeholders to assess the key
characteristics and make strategic investment decisions. The Principles involve:
(1) the target orientation of investments as a result of the GBs placement,
(2) green projects’ selection and evaluation, (3) funds management, (4) reporting
(ICMA, 2021). The certification of securities provides for disclosing information on
the expenditure of emission funds, which is important for two reasons. First, it
guarantees the investor that his funds will be spent on climatic purposes. Secondly,
public authorities have the opportunity to support the GB market. Marking is carried
out based on international rules and procedures in the Green Bond Principles (GBP)
and the Climate Bond Standard (CBS) adopted by international organizations. At the
same time, the European Green Bond Standard (EUGBS) certification is being
developed, which is expected to become mandatory in EU countries.
Green bond ratings are assigned to both individual issues and entire securities
programs. Moody’s international rating agency has developed a methodology for the
GB assessment (GBA) based on the issuer’s compliance with the principles of
targeted use of funds, project management, and reporting. The GBA uses the climate
bonds initiative (CBI) criteria and The International Organization of Securities
Commissions (IOSCO). If a company wants to receive a CBI certificate after the
GB issue, it should apply to CBI accreditation experts. These institutions include
international consulting and audit companies, certification agencies (such as ERM
Certification and Verification Services, Kestrel Verifiers, and TÜV NORD CERT),
and responsible investment consulting companies (such as Sustainalytics and Vigeo

Eiris). However, the listed standards are voluntary and are only partially accepted in
the ratings (Standard & Poor’s estimates their share at 5%). One of the problems in
the international GBs market is the lack of unified tools for their verification.
The dynamics of the GB market can be best presented in the CBI statistical
reviews. The continued acceleration of green issuance drove it to over half a trillion
(USD517.4 billion) in 2021. The annual figure is the highest since the market
inception and maintains the trend of 10 consecutive years of growth (CBI, 2021a).
The current growth trajectory could result in the first annual green trillion in the year
ahead—a goal first set by the Conference of Parties (COP22) in 2016. The early
achievement of this milestone this decade serves as a key indicator that capital is
being shifted at scale towards climate solutions as the world races the clock (CBI,
2022).
Different estimates of the GB’s annual issuance are given by world experts, but it
still provides a useful reference point for comparing current investment levels. Sean
Kidney, CEO of Climate Bonds, has nominated annual green bond issuance of
USD5 trillion by 2025 as the next global milestone governments, policymakers,
and investors need to reach as the necessary contribution to the climate goals
achievements (CBI, 2022). According to estimates from the IMF and International
Energy Agency (IEA), achieving net-zero carbon emissions by 2050 will require
additional global investments in the range of 0.6–1% of annual global GDP over the
next two decades, amounting to a cumulative USD12–20 trillion (IMF, 2021a,
2021b, p. 60; IEA, 2021). In the Reuters poll of economists in Europe, Asia, and
the Americas (September–October 2021), there was substantial divergence in the
scale of dollar estimates for the cumulative investment needed, reflecting the differ-
ing methodologies used by economists. The median view provided was that the total
value was USD44 trillion. Oxford Economics experts, however, estimated that the
cumulative amount of investments required in alternative energy and other sectors
would reach almost USD140 trillion by 2050, the highest estimate obtained in the
survey (CBI, 2022).
As for the issuers, in 2021, 54% of the issue volumes were provided by the United
States, Germany, China, and France (CBI, 2021b). Moreover, the first two countries
continue to hold the lead, and this trend appears to be ongoing. China has also
become one of the leading countries where the issuance of GBs is based on the
refinancing of green loans. In 2021, China moved up one position to take third place
from France, the fourth-largest emitter of greens in the previous year. Major Chinese
banks, including the Industrial and Commercial Bank of China (ICBC), place large
volumes of GBs in the domestic market and the world’s financial centers.
Currently, more than three-quarters of the GB issue is provided by RDBs and
TNCs. The leadership in the Top 10 Climate Bond Certified Issuers in 2021 belongs
to Chinese banks (China Development Bank and ICBC), Société du Grand Paris
(France), Queensland Treasury Corp (Australia), and ABN AMRO Bank NV (Neth-
erlands). Other notable issuers include Norwegian financial group DNB ASA, the
Republic of Chile, Australian bank Westpac, National state railway holding of Italy
Ferrovie dello Stato (FS) Italiane, and Indian renewable energy company ReNew
Power (Table 4).
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Green Finance Instruments, Fintech, and Investment Strategies: Sustainable Portfolio Management in The Post-Covid Era 1St Edition Nader Naifar

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Green Finance Instruments, FinTech,

and Investment Strategies: Sustainable

Reshaping the Business World Post-COVID-19: Management

Understanding Cybersecurity Management in FinTech:

Green Technological Innovation for Sustainable Smart

Green and Sustainable Finance: Principles and Practice

Cambridge IGCSE and O Level History Workbook 2C - Depth

Equipment Management in the Post Maintenance Era

Listed Private Equity Investment Strategies and Returns

Digital Transformation in a Post-Covid World:

Green Finance Instruments,

ISSN 2522-8285 ISSN 2522-8293 (electronic)

In a post-COVID-19 pandemic era, a sustainable ﬁnancial system is getting more

Riyadh, Saudi Arabia Nader Naifar

Part I Green Finance, Sustainability, and Investment Strategies

Part II The Impact of Fintech and Investment Sustainability

The Sandbox in Saudi Arabia: A Regulatory Approach and

Nader Naifar is a Professor of Finance at the College

Ahmed Elsayed is an Associate Professor of Econom-

Financial Development, Financial Market Integration,

K. S. Sastry Musti (✉)

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 3

3 Identiﬁcation of Needs, Challenges, and Risks in ESI

3.1 Load Following Power Production

Varying Load and Energy Unsold

Fig. 3 Energy mix with base load and solar plants

3.2 Duck Curve

Conventional power plants contribute highly to the emission of greenhouse gases to

ﬂexibility to utility engineers in dealing with operating conditions. The problem

3.3 Location of IPP

3.4 Policy Framework and Possible Contradicting Aspects

3.5 Energy Market Design and Operating Conditions

Fig. 5 ESI verticals, energy ﬂows, and cash ﬂows

4 Opportunities with Smart Grids

However, a majority of the power transmission and distribution networks are

networks. However, this challenge can be considered as an opportunity if the energy

4.1 Application of Multicriteria Decision Methods

Application of MCDMs to various aspects of energy systems is of signiﬁcant

4.2 Energy Mix

Table 1 Default input data for renewable energy selection

Table 2 Overall rankings of renewable energies from different MCDM

4.3 Risk Evaluation

Liudmila Filipava and Fakhri Murshudli

The popularization of “green” ideas contributes to the globalization of green ﬁnance

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 27

2 Understanding Sustainable and Green Economy:

2.1 Green Economy as an Integral Part of Sustainable

In the scientiﬁc community, there is often a divergence of views on the term

Table 1 The green economy forms

technological paradigm based on energy efﬁciency and biotechnology, involving

Table 2 Informal green initiatives

2.2 Conceptual Approaches to the Deﬁnition of Green

Sustainable ﬁnance is an integrated approach that combines different strategies to

Table 3 Comparative analysis of “green” and “brown” ﬁnance

3 The Current Trends in the Global Green Finance Market

3.1 Green Economy Financing Instruments

and responsible investment consulting companies (such as Sustainalytics and Vigeo

• You provide a full refund of any money paid by a user who

• You provide, in accordance with paragraph 1.F.3, a full refund of

1.E.9. If you wish to charge a fee or distribute a Project

1.F.1. Project Gutenberg volunteers and employees expend

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