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The cost of debt of renewable and non-renewable energy firms


The risks imminent to younger technologies and markets may hinder renewable energy firms’ access to financing. This could curtail the investment needed for the transformation of the global energy sector. However, comprehensive analyses of the cost of debt of renewable and non-renewable energy firms are lacking. Here, we empirically analyse the differences between the costs of debt of firms developing and producing renewable energy technologies and of non-renewable energy firms. We use global micro-level data on individual loans matched to firm-level data. The results suggest that renewable energy firms might face a higher cost of debt initially, when technologies and markets are young and immature. However, a cost advantage of renewable energy firms emerges over time. The results also show that the costs of debt of renewable energy firms are lower in economies with a more developed banking sector and comparatively stringent environmental policies.

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Fig. 1: Costs of debt of renewable energy and non-renewable energy firms.
Fig. 2: Costs of debt of renewable energy firms relative to non-renewable energy firms.
Fig. 3: Costs of debt and environmental policy stringency.
Fig. 4: Costs of debt and financial sector development.

Data availability

The data that support the findings of this study are available from Bloomberg and S&P Global Market Intelligence, but restrictions apply to the availability of these data, which were used under licence for the current study, and so are not publicly available. Country data on environmental policy stringency are available from the OECD Environmental Statistics36. Country data on the development of financial institutions are available from the IMF (ref. 38). The data that support the figures and other findings within this Article are, however, available from the authors upon reasonable request and with permission of Bloomberg and S&P Global Market Intelligence.

Code availability

The Stata code can be obtained from the authors upon reasonable request.


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The Article benefited from discussions at the 2019 IAEE European Conference and the CARIMA symposium as well as the 2020 conferences of the AERE, EEA, GRASFI and VfS. We gratefully acknowledge the support from the German Federal Ministry of Education and Research within the Call ‘Ökonomie des Klimawandels’ (funding code 01LA1830A: Sustainable Finance and Its Impact (SUFI)). K.K. and O.S. are grateful for the support of the Robert Bosch Foundation.

Author information




K.K., U.M. and O.S. developed the research idea. K.K. and O.S. collected and compiled the data. K.K. took the lead in conducting the econometric analyses in Stata and the presentation of results in tables and figures with significant input from U.M. and O.S. All authors jointly wrote the manuscript.

Corresponding author

Correspondence to Karol Kempa.

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The authors declare no competing interests.

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Peer review information Nature Energy thanks Rohan Best, Julie Byrne and Florian Egli for their contribution to the peer review of this work.

Publisher’s note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Supplementary information

Supplementary Information

Supplementary Tables 1–10 and Fig. 1.

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Kempa, K., Moslener, U. & Schenker, O. The cost of debt of renewable and non-renewable energy firms. Nat Energy 6, 135–142 (2021).

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