gcfa-news

Septeber 22, 2025 Kate Costaris, Sydney Wisener

First-of-a-Kind (FOAK) projects sit at the frontier of innovation – whether in hydrogen, carbon capture, long-duration energy storage, or industrial process electrification. These projects promise transformative climate solutions but face a steep climb for financing. The barriers are well known, ranging from capital intensity, high technical risk, unproven business models, to a lack of revenue certainty. While governments often provide early-stage support, these short-term grants and fragmented pilot programs do not follow the climate venture through to attracting private investors at the scale needed to bring FOAK solutions to market.

The Financing Deadlock

Yes, FOAK projects are risky. Developers face engineering challenges, offtakers are reluctant to commit to long-term contracts until technical risks have been satisfactorily mitigated, and later stage investors and lenders wait for the fundamentals to be de-risked. This standoff creates a “chicken and egg” problem, with each player waiting for another to put in the first tranche of first loss capital. Without deliberate intervention, many promising projects stall between pilot and commercial deployment.

Policy volatility is compounding the problem. Shifting subsidies, inconsistent carbon pricing, and unpredictable regulatory changes undermine investor confidence, which raises hurdle rates and discounts future returns. The result is a higher cost of capital that FOAK projects, already strained by technical and commercial risks, cannot afford.

Why Predictability Matters

Predictability is the foundation of investment. Developers and investors alike need clear line-of-sight on revenues, regulatory frameworks, and long-term policy commitments. Consistency in carbon pricing, clean energy standards, and procurement mandates signals to markets that FOAK technologies will not be stranded by sudden policy reversals. Without that confidence, capital remains sidelined.

Carbon contracts for difference (CCfDs), pioneered in Europe, reduce exposure to policy volatility by, for example, guaranteeing a stable future price of carbon. If policy-driven prices suddenly drop, whatever government is in power at the time is contractually obligated to cover the gap, giving developers and investors a boost of revenue certainty to help finance capital-intensive projects.

Milestone-based financing also attracts capital for projects by releasing funds as technical and commercial risks are progressively retired, helping match capital deployment with real progress. When the entire capital stack develops this structure together, including government and philanthropic catalytic capital to address gaps as they arise, investors are provided with greater security, reducing the risk of backing a project that stalls. Co-investment with public institutions plays a catalytic role. Export credit agencies and green banks act as catalytic anchor capital providers. Early capital signals confidence that can help bring private investors off the sidelines, but it’s the role they can play in committing to plug into gaps and mitigate risks through such mechanisms as loan guarantees that really makes the difference.

Robust carbon markets and renewable energy credits offer more predictable revenue streams, allowing ventures to monetize climate benefits while boosting investor confidence. Strengthening these markets through clearer policy frameworks, consistent valuation mechanisms, and measures to incentivize demand, would allow jurisdictions to better leverage these tools for FOAK projects.

Policy Intervention: The Climate Finance “Concierge”

Over two years at the Global Climate Finance Accelerator, we designed a hypothetical “FOAK Capital Partnership Platform”. This platform commits catalytic first-loss capital, but only in exchange for coordinated participation from developers, investors, offtakers, and lenders. It embeds milestone-based disbursements, aligns public and private risk-sharing, and offers conditional offtake guarantees. By integrating all players from the outset, we believe it would transform today’s fragmented funding environment into a coordinated capital deployment ecosystem.

Follow the Accelerator’s progress as it tests this platform with TRL 7+ ventures approaching their first commercial project with this year’s new cohort of Accelerators-in-Residence.
Contact info@globalclimfin.com to get involved.

Kate was a 2023-2024 Accelerator-In-Residence at the Global Climate Finance Accelerator. Her professional experience spans climate finance research, sustainability fieldwork, and several roles in the start-up and corporate space in London and Toronto. With this unique combination of extensive academic expertise, a passion for climate advocacy, and a diverse commercial background, she is actively exploring how financial instruments can be used to influence positive environmental outcomes.

Sydney was a 2024-2025 Accelerator-In-Residence at the Global Climate Finance Accelerator, and a Master of Global Affairs candidate (2026) at the Munk School of Global Affairs and Public Policy. Sydney is also a Lupina Fellow at the Innovation Policy Lab at University of Toronto, researching the startup-to-scaleup gap in the Canadian cleantech ecosystem.

It is no secret that coral reefs worldwide are under significant duress from a multitude of factors, the most significant of which is climate change. Reefs are prehistoric, diverse habitats, providing nearly twenty-five percent of marine species with the resources necessary to thrive, including food and shelter. Even humans rely heavily on reefs for protection from coastal erosion, as well as seafood production, tourism, and medicine. The threat of coral extinction, therefore, presents dire consequences for aquatic and terrestrial life alike. 

Corals often take hundreds of years to become fully formed and therefore cannot reproduce quickly enough to compensate for the vast amount of damage that has already been done. Fortunately, researchers have been working to determine how to rebuild these marine environments at more rapid rates. Last summer I had the opportunity to visit a land-based coral-and-crab nursery in Puerto Morelos, where scientists are trying to restore these vital ecosystems by developing coral nurseries. You can read more about this important work in my blog.

Another prominent tactic to restore or create a reef ecosystem is the production of sanctioned artificial reefs by purposefully sinking ships and other equipment. According to NOAA researchers, artificial reefs are installed both to create new habitats and restore degraded ones. Once an item of human-made origins sinks, a fresh ecosystem instantaneously begins to develop around the entity. Initially, the sunken vessel is colonized by a community of fish, starting out small and gradually growing in complexity. In this time, the surface of the object becomes populated with algae and invertebrates such as coral and sponges. 

The surrounding currents may also push plankton into the area, resulting in the arrival of small forage fish, which in turn attract larger predators like sharks, tuna, and barracuda. Eels and groupers may be found hiding out in the secluded holes and crevices of the wreck as well. As the wreck evolves into a vibrant reef, a new, unfamiliar species finds itself drawn in: humans.

Following my volunteer conservation adventure in Mexico last year, I was fortunate to once again represent the Global Climate Finance Accelerator on an exploration of these artificial reefs. I dove through the wreck of a 165-foot freighter ship called the Pamir in Barbados, which was intentionally sunk in 1985 off the country’s west coast. Resting in 60 feet of water, the Pamir’s wreck is now home to a diverse ensemble of marine life: Various sponges and corals have attached themselves to the walls and floors of the wreck, drawing in fish, cephalopods, crustaceans, and more. 

Barbados offers three other spectacular wreck dive sites, the largest of which is the SS Stavronikita, a 365-foot freighter sunk in 1978 with the intention of creating an artificial reef. Another popular site is Carlisle Bay, which boasts six shipwrecks of varying ages and sizes, though only four were sunk deliberately. Each wreck offers a unique habitat of marine life, making this site a particular favourite. The final site is the Friars Crag, a sister ship of the Pamir that, when sunk, broke into three mangled pieces. Still, the wreck manages effectively as an artificial reef. 

Barbados is only one of many examples of a nation contributing to this habitat restoration process, though much remains to be learned about its impact on the natural ecosystem. To illustrate, researchers are still working to determine whether the abundance of fish on artificial reefs results from genuine population growth, or if the animals merely redistribute themselves from previous habitats. It is also critical to note that any sunken object is not automatically a good home for marine life; in fact, if not treated with proper care, a wreck can become a source of water pollution.

While Barbados shows the potential of artificial reefs for ecosystem restoration, not every wreck is successful. In 1991, a ship went down in the Palmyra Atoll, a remote coral ecosystem just south of Hawaii. The atoll is protected as a National Wildlife Refuge and is renowned for its thriving reefs and abundant wildlife. Unfortunately, around 2007, researchers in the area observed an outbreak of a type of marine cnidaria called corallimorphs, eventually determined to be a result of the wreck settled on the seafloor. The researchers hypothesized that iron runoff from the chains mooring the ship caused an explosion of algae, as algae requires iron, not typically plentiful in this environment, to grow. 

Found within many marine invertebrates, including corallimorphs, is zooxanthellae, a symbiotic algae, which seemed to have fed off the iron to simulate an overgrowth of corallimorphs on the reef surrounding the shipwreck. As the corallimorphs spread, it smothered the existing coral, causing significant habitat degradation. After being identified as the root cause of the overgrowth, the shipwreck was removed, and efforts have since been made to remove the remaining corallimorphs. It will be a long and difficult restoration process, made more challenging with rising water temperatures allowing for corallimorphs to reproduce faster. Researchers thus emphasize the importance of taking immediate action to address unintentional or improperly placed wrecks in marine environments.

The value of artificial reefs ultimately depends on us – on whether we choose to pursue restoration responsibly, invest in research, and protect the remaining natural reefs. It is crucial to remember that, although the ocean sustains us, it is not a commodity, nor should its resources be treated as disposable. Without coral reefs, the ocean cannot thrive, and without the ocean, neither can we. As we navigate the uncertain waters of climate change, artificial reefs represent a hopeful experiment in restoring ecosystems and strengthening coastal resilience.

Nicole Zavagno is an incoming first-year science student at Dalhousie University with plans to major in marine biology. She is a PADI open water certified diver and holds a Canadian national lifeguarding certification.

Susan McGeachie joins the Mantle Developments team for a tour of the University of Toronto’s mass timber building, a first of a kind construction in Toronto demonstrating sustainable design.

A recent roundtable with leading venture capital investors convened by MaRS Discovery District surfaced key insights around the persistent financing gap for first-of-a-kind (FOAK) projects.

MaRS’ Tyler Hamilton and Leah Perry opened up the discussion with a recent CTVC newsletter highlighting what many in the industry already know: First-of-a-kind (FOAK) projects remain a major funding cliff, with 69% of respondents expecting investment in FOAK deployments to decline. The survey identified a particular pinch point in the $40M–$100M project range, often called the “missing middle within the missing middle,” where financing is hardest to secure. The two primary reasons for the decline are:

• High Risk, High Uncertainty: Without a proven track record or risk-sharing structure, these projects struggle to attract traditional VC, PE, or project finance.
  
• Policy Volatility: Investors cite “policy whiplash” as their #1 fear for early projects, adding to perceived risk.

This decline underscores the persistent gap between promising pilot projects and commercial-scale execution. As the challenge becomes more acute, it’s critical to identify and investigate practical, creative strategies ventures are using to bridge the FOAK gap. While philanthropic and catalytic capital players are stepping in to bridge funding for these early deployments, creating a cohesive financial architecture that unlocks broader participation across venture, growth equity, and long-term institutional lending is needed to mobilize the magnitude of capital required.

Philanthropic catalytic capital is uniquely positioned to absorb early risk and validate emerging models, helping to unlock later-stage private and institutional investment in FOAK projects. According to ClimateWorks’ Funding Trends 2023 report, climate philanthropy reached approximately USD 4 billion in the US – more than 50% of global climate-focused giving – compared to less than CAD 100 million in Canada. The UK and Europe reached approximately USD 1 billion combined, revealing a significant disparity in philanthropic firepower. To bridge this gap in Canada, coordinated efforts are needed to deploy catalytic capital strategically de-risking FOAK deployments, support platform-based investment models, and anchor blended finance structures that invite broader market participation.

Early equity investors play a critical role in FOAK deployments, as they understand these projects won’t deliver the same returns as second-, third-, or later-of-a-kind investments. To attract VC capital, FOAK projects must be structured as platforms, with the option for follow-on participation and first right of refusal on future deployments. The investment model is built on ‘plug-and-play’ modules that standardize the financial structure, site assessments, EPC contracts, risk allocation, project milestones, performance guarantees, and monitoring. A robust pipeline of LOIs and long-term partnerships with clients, offtakers, and suppliers, designed for replication across multiple projects, is essential to scale. Blue Reef Capital illustrates a proposed funding structure in Figure 1, below.

Figure 1: Proposed Funding Structure for Scaling FOAK Projects

The financial modelling required to raise hybrid funding must have both consolidated Holdco equity metrics/projections, with specific and project-level metrics and projections (demonstrating the Holdco + project ‘equity’ investor % participation in the project SPV). FOAK project finance is generally equity, not debt. Equity and project equity alignment is vital as, for the first few years, the project equity investor will receive a significant preferred return from the project SPV until they hit their equity hurdle rate, and then SPV distributions are split based on Holdco/project equity ownership.

While standardizing investment structures is key to scale, most EPC contracts will be prohibitively expensive at the FOAK stage. Companies need to leverage the assessments and performance metrics from similar technologies and have fully committed service providers in place with a track record of delivering. By the second-of-a-kind (SOAK) project, they will need an EPC.

The KEY criteria for getting FOAK funding is to have a corporate/strategic partner who has either commissioned/sponsored a paid pilot, committed to an offtake, or featured on the cap table. Governments can support this effort by requiring a FOAK decarbonization project as a requirement for federal funding.

Finally, technical fluency is essential, as few investors are willing to absorb technology risk, especially in the wake of recent valuation corrections following early market hype. To bridge this gap, technical and investor expertise must be integrated to help the cap table better recognize and underwrite the opportunity.

The FOAK financing gap is a key focus in the Global Climate Finance Accelerator’s 2025–2030 programming. By convening academia, business, government, and finance, and engaging graduate students in finance, engineering, policy, and science, we will pilot FOAK projects to co-develop the capital models and de-risking strategies required to bring these projects to market.

Thanks to MaRS and their network of VCs and intermediaries for sharing practical, implementable examples of FOAK financing from their own experiences.

About the authors

Susan McGeachie is CEO of the Global Climate Finance Accelerator, which convenes partnerships across business, finance, government and academia on strategies, policies, procedures, and tools to finance the deployment of technically viable climate solutions. 

Marc Oppenheim runs Blue Reef Capital, an elite corporate finance boutique that raises blended capital for world-leading climate tech companies.

The Global Climate Finance Accelerator was established in response to global efforts to gradually reallocate the flow of capital from high carbon intensive assets to low ones. To change the “no go” investment to “how to”. 

How can a privately owned mid-sized business owner actively participate in – and benefit from – Canada’s national electrification efforts? How can we make it economically viable for this business owner to invest in his own onsite renewable energy generation to power the electrification of his fleet and warehouses? And then how do we aggregate multiple businesses doing the same thing – perhaps just within a single province to start but scaling across the nation – to attract larger flows of capital into a securitized pool of individual, small business investments?

The mid-market is the backbone of the Canadian economy. Finding the “how” to ignite this engine will turn policy ambition into real-world impact. It will also help enable a much-needed diversification of Canada’s economy by ensuring small and mid-sized companies can shape, not just access, the clean economy. That means moving beyond enabling investment for a few large players to a decarbonization investment landscape in which everyone can participate.

Democratizing access to investment serves an important dual purpose: First, it builds a more resilient, diversified economy – people can seek employment opportunities from a rich tapestry of options rather than the limited selection we have today. Secondly, and perhaps more importantly, it would create a culture of shared ownership and excitement around the clean energy transformation, rather than the current indifference we’re experiencing because most people are excluded from the upside of decarbonization. 

The shift to clean energy isn’t just a story about cutting emissions. It’s a story about building industries that will define our country’s prosperity for the next 50 years.

These stories matter, a lesson we can learn from other countries that have set themselves up on radically different paths than the one we seem to be following here in Canada.

Norway, for example, discovered oil in the North Sea in the late 1960s. But instead of simply unleashing private interests to extract it, they nationalized the resource, creating Statoil (State Oil), which was later transformed to Equinor to reflect the company’s evolving strategy beyond oil and gas to renewables. The new name is a blend of “equi” symbolizing equality and equilibrium and “nor” for Norway, underscoring the company’s purpose to serve Norwegians. 

Most importantly, the company’s revenues were channeled into a sovereign wealth fund. Today, that fund is worth over US$1.6 trillion with the proceeds used to invest in education, clean energy, and public infrastructure. 

From the start, Norway saw oil not as a forever fuel, but as a temporary windfall to buy time for what’s next.

What’s often overlooked in this story is just how much cultural alignment that took. While it may have been easier for Norway to build national consensus than in Canada, it still took a deliberate, hard-won effort on the part of government, civil society, and industry. Norwegians had to be convinced that the purpose of this money-making resource should be to invest in a diversified economy. 

That mindset shift was just as important as any industrial policy or legislation.

Here in Canada, we are at a crossroads. We could double down on business as usual. Or we could make a bold choice to treat electrification and decarbonization not as costs to the economy, but as the foundation of a new, future-proofed one.

We won’t succeed if all provinces aren’t working together. 

Canada’s inter-provincial barriers are one of the greatest threats to our economy. 

Many of our provinces are rich in clean energy resources. But we lack the interprovincial transmission infrastructure needed to move electricity efficiently across the country. Major electrification projects need to navigate federal regulations, provincial permitting, municipal zoning, and sometimes multiple court challenges. All of which could be subject to political turnover or policy reversals. 

Investors don’t fear regulation — they fear unpredictability.

Perhaps worse is that raising the investment capital across provinces to pay for national interests is a legal and logistical headache. Securities regulation is fragmented, making it more expensive to raise capital in Canada for businesses trying to operate or attract investors across multiple provinces.

Anyone who plays a team sport knows that a group of players who trust one another and play as a unit can outperform even the most talented individuals who act alone and are critical of one another. Canada is the later – we need a good coach to get us playing like a team. (Maybe now we have one!)

The good news is that the economic and social opportunities ahead of us are massive, and there is still time to capitalize on them. 

Clean electricity opens the door to entire industries: battery manufacturing and recycling (sidebar to Canadian investors to save Li-Cycle!), green hydrogen, electric vehicle supply chains, data centers powered by renewables. In 2023, for the first time, global investment in clean energy exceeded that in fossil fuels. This isn’t about ideology – it’s about markets. And risk management.

Canada has the minerals, the engineers, the large pools of capital, and the know-how to structure the right policy, technology, and investment pathways to get there. 

The opportunity is ours for the taking. 

We decide.

Susan McGeachie is CEO of the Global Climate Finance Accelerator, which convenes partnerships across business, finance, government and academia on strategies, policies, procedures, and tools to finance the deployment of technically viable climate solutions.

What if the communities most vulnerable to climate impacts were also the ones best positioned to lead the energy transition?

Across North America, Indigenous communities are already living with the realities of climate change: disrupted power systems, rising energy costs, and increasing grid instability. And yet, most energy solutions brought to these communities are designed elsewhere, financed elsewhere, and ultimately benefit someone else. The result? An energy transition that risks leaving the most affected behind.

The Global Climate Finance Accelerator team set out to flip that script.

Our work to advance Indigenous-owned solar and battery energy storage systems (BESS), with financing built around long-term community ownership and control raised a larger question: If community-led clean energy holds so much promise, why isn’t it more common?

Our project explored what it takes to make these projects work, not just on paper, but in practice. 

The Opportunity

In his keynote at CIBC’s Electrification Summit earlier this year, Nat Bullard made clear where he’s placing his bets in the energy sector. The energy transition, he argues, isn’t political. Energy sources rise and fall as more effective, efficient, and affordable alternatives emerge. In addition to being more accessible for communities to understand and adopt, the shorter development timelines for solar, batteries, and wind mean they can be advanced more quickly. This makes them especially well-suited for the growth of distributed energy resources (DER), providing flexible, scalable solutions that can relieve pressure on centralized grids and meet rapidly growing energy demand. 

A Tale of Two Countries

Both Canada and the US offer direct pay tax credits for tax exempt organizations, allowing Indigenous governments and ventures to receive the credit as a direct cash payment. Canada pulls ahead in Indigenous investment attractiveness through game-changing financing support with the $10 billion federal loan guarantee, which is stackable with provincial programs, and concessional capital through the Canada Infrastructure Bank and Canada Growth Fund. Similar opportunities in the US are not as advanced, particularly as aspects of the IRA are being reconsidered. The country does, however, have a more active market for DERs, including solar-plus-storage systems and microgrids at the state level. While Canada has initiatives to support DERs, the market is more fragmented, and Indigenous participation has historically been concentrated in large-scale utility projects, including natural gas and hydro. This focus may limit opportunities for community-scale innovation and localized energy sovereignty for Indigenous Nations in Canada and may increase their exposure to the risk of stranded assets.

What We Can Learn from Global Energy Markets: Lessons in Participation

Ownership, Not Just Access: Germany’s clean energy story is as much about participation as it is about technology. Over the past two decades, energy cooperatives have allowed citizens to collectively invest in and benefit from renewable energy assets. Whether it’s a wind turbine or solar farm, residents share the risks and the returns. What sets this model apart is structure. The rules governing co-ops are built into Germany’s policy framework, making it easy for communities to form legal entities, raise capital, and interface with utilities. This kind of systemic design makes community participation the default rather than optional.

Building Trust Through Stability: Chile’s PMGD program (Pequeños Medios de Generación Distribuida) supports small and medium-scale energy producers by offering stable pricing mechanisms for power sold back to the grid. In a sector where volatility often deters participation, this price transparency builds confidence for smaller players, including community groups and local businesses. Although the program has its critics, it illustrates that good policy isn’t just about incentives, it’s about predictability, which builds trust.

Grassroots First, Infrastructure Second: Indonesia’s community-led clean energy models are among the most powerful in showing what real local ownership looks like. In Kedungrong Hamlet, a community-run micro-hydro project powers local homes through grassroots leadership. Programs like MENTARI and ACCESS go beyond electrification, supporting livelihoods like farming and food processing. 

Shifting Energy Into the Hands of Citizens: India’s clean energy transition is increasingly being built from the rooftops up. Through the PM Surya Ghar: Muft Bijli Yojana, households are offered free electricity up to 300 units per month for installing rooftop solar, essentially transforming every household into a potential energy producer. Instead of relying on large-scale infrastructure alone, this policy invites mass participation, backed by upfront subsidies and simplified application processes. PM-KUSUM, meanwhile, empowers farmers to solarize their irrigation pumps and feed excess power back to the grid, ensuring energy security while turning a cost center into a revenue stream. Together with the Production Linked Incentive (PLI) Scheme for solar PV manufacturing, India’s approach addresses both demand and supply, embedding trust by making the incentives direct, visible, and local.

Rethinking What Success Looks Like

Global examples offer a roadmap for shifting away from top-down energy systems toward models built on trust, participation, and shared benefit. Despite current headwinds, the opportunity for First Nations ownership in clean energy has never been stronger, especially when supported by renewable energy developers operating on both sides of the border who understand how to build meaningful, values-aligned partnerships with Indigenous communities. 

Opportunities are enabled by blended capital stacks that combine low-cost, concessional debt from catalytic philanthropic capital with tax equity structures that leverage direct pay Investment Tax Credits. Communities can unlock equity ownership while reducing financial risk. When layered with traditional debt to provide structure and scale, augmented by regional incentives and revenue from renewable energy credits (RECs), these structures help lower the cost of capital and support long-term wealth-building, energy sovereignty, and self-determined economically sustainable climate leadership.

Sunidhi Adiga combines her background in Electrical and Electronics Engineering with a passion for social entrepreneurship to drive sustainability-focused solutions. She has worked in technology consulting at Deloitte, where she led digital transformation initiatives. Sunidhi developed a tool to support investment decisions in renewable energy projects, offering real-time insights on key financial metrics, and is currently creating an AI tool to help companies convert their sustainability initiatives into strategic advantages. Currently pursuing her MBA at the University of Toronto’s Rotman School of Management, she focuses on integrating finance, technology, and strategy to foster sustainable change.

Why Ontario’s SMEs Are Ready to Shine

Small and Medium-sized Enterprises (SMEs) in Ontario are pivotal to the province’s economy, yet they encounter several deal stoppers when it comes to reducing their carbon footprints. Limited access to economically viable decarbonization pathways prevents many of them from undertaking the deep retrofits required to reduce or remove emissions from their owned and operated facilities.

In our work with one such company, which owns its own portfolio of warehouses, we identified an exciting opportunity for these types of companies to get involved in Canada’s decarbonization efforts and energy transition. Implementing rooftop solar photovoltaic (PV) systems gives SMEs a direct method to generate clean energy and decrease greenhouse gas emissions.​

Ontario is on the cusp of a substantial surge in electricity demand, projected to escalate by approximately 75% by 2050. This increase is driven by factors such as population growth, economic expansion, and the electrification of industry. Addressing this rising demand necessitates innovative strategies to alleviate potential grid congestion and ensure a stable energy supply. Distributed energy resources, like rooftop solar PV installations on SME premises, can play a crucial role in mitigating grid strain by generating electricity closer to the point of consumption, thereby reducing transmission losses and enhancing grid resilience.​

Scaling rooftop solar PV installations for SMEs in Ontario addresses critical needs by addressing the province’s escalating energy demand and grid congestion as well as promoting investment and job creation within the clean energy sector.

From Pilots to Paybacks: What One Warehouse in Mississauga Can Teach Us

To realize the benefits of rooftop solar PV adoption, SMEs must proactively assess their energy needs, explore financing mechanisms, and leverage available incentives to make installations economically feasible. This includes conducting site assessments, evaluating consumption patterns, and identifying peak demand charges that could be offset by solar generation.

In our efforts to advance clean energy adoption among SMEs, the Global Climate Finance Accelerator (GCFA) conducted a sample analysis of a commercial warehouse in Mississauga. Our case study illustrates how rooftop solar PV can be effectively integrated into a SME’s operations, highlighting technical feasibility, potential cost savings, and broader environmental and economic impacts. The findings provide a valuable reference for SMEs across Ontario looking to transition toward clean, distributed system energy solutions.

Five scenarios were evaluated, ranging from battery storage alone to combinations of rooftop solar, electric heating, and energy storage. The analysis was supported by the company’s consumption data and aimed to identify solutions that balance economic return and carbon reduction.

The lowest-cost option, a standalone battery system with 4 hours of storage, offered the shortest payback period of 4-5 years and attractive savings off the company’s annual electricity bill. It did little, however, to reduce emissions. Integrating 1.06 MW of rooftop solar PV with electrification of space heating was found to be the most economically viable path to decarbonization. This option showed a payback of 5-6 years and annual savings of nearly C$200,000. The business case was supported by recent federal incentives that yielded over $1.1 million, significantly reducing upfront capital costs.

More ambitious options, such as adding battery storage or electrifying both space and process heating offered greater emissions reductions but required significantly higher investments and longer payback periods. Our key takeaway is that SMEs don’t need to pursue complex solutions to help mitigate climate change. Targeted solar PV investments with heating electrification can yield meaningful climate benefits and attractive returns.

Scaling Solar: Finance, Securitization, and Canada’s Bright Rooftops

While this case study illustrates the business case for rooftop solar PV paired with heat electrification, realizing impact at scale requires moving beyond individual pilots. With over 14 GW of untapped rooftop solar potential across Ontario, the next step is unlocking the mechanisms that enable wide-scale adoption, particularly for SMEs, which are often hesitant to bootstrap upfront investment.

To scale adoption, a rooftop solar investment platform could aggregate commercial and industrial (C&I) projects, pool investor capital, and provide consistent returns through long-term power purchase agreements (PPAs). GCFA modeling shows that bundling approximately 100 MW of generation capacity yields an ~12% internal rate of return. Scaling to 80 facilities could unlock ~500 MW, improving capital efficiency and ensuring predictable cash flows to reduce investor risk. On-Bill Financing (OBF) programs could accelerate update, which projects eventually securitized and sold to institutional investors. A municipal green bond would help derisk aggregated projects. The key to unlocking this opportunity in Ontario, however, is the launch of the IESO’s Local Generation Program, which is currently under development with a planned launch in 2026.

Beyond Ontario, Canada could draw inspiration from the U.S.-based Mosaic model, which demonstrates how asset-backed securitization (ABS) of residential solar loans finance distributed energy systems at scale. By combining aggregation, long-term contracts, and innovative financing instruments, Canada can activate its rooftop solar market empowering SMEs and accelerating each province’s clean energy transformation.

Industry feedback reinforces that scaling rooftop solar PV in Ontario and eventually across Canada requires a clear financial structure for securitization, strong partnerships with local distribution companies, and reliable energy offtake contracts to attract investor confidence. Addressing upfront deal costs and identifying ideal customer profiles, such as SMEs with high daytime loads and underutilized roof space, will be critical to designing a scalable, investment-ready model. With thoughtful implementation and alignment between policy, finance, and infrastructure, rooftop solar PV can become a cornerstone of Canada’s clean energy future, powered not just by technology, but by inclusive, locally driven climate action.

Deep is an Accelerator-in-Residence with the Global Climate Finance Accelerator. A dedicated energy management professional, he has a proven history of meeting company goals and helping businesses achieve their GHG and energy reduction targets. Deep is skilled in adapting to new challenges to help utilities find solutions to complex issues in the energy conservation and transition industry. He is excited to begin a new chapter as Consultant, Energy Transition at Posterity Group.

Along the coastlines of Africa, the ocean has always been more than water. It’s culture, it’s survival, and it’s currency. In climate finance, however, it has only recently become a market.

Project Ocean Love aims to shift that perspective. As a community-led environmental data monitoring solution, it is built to generate local, high-integrity data to help communities, governments, and businesses monitor the impact of changing weather on the natural environment. This solution enables local communities to identify adaptation measures to protect their homes and livelihoods. 

It isn’t just about protecting nature. It is about building a climate venture rooted in equity, infrastructure, and long-term ownership for women and youth in local communities.

Where Things Get Hard

Ocean Love reveals a hard truth in climate finance: most community-driven ventures stall between vision and viability.

To sell credits or high-value data, you need verified monitoring. To build monitoring infrastructure, you need capital.
To attract capital, you need proven results.

It’s the classic chicken-and-egg problem, especially in Africa where financing opportunities are bespoke, with lower deal values. As we strive for inclusive, community-first models, capital continues to prioritize ventures with short term, quantifiable, and low-risk returns. That leaves local ownership behind.

“We’ve been protecting this coastline long before the market cared about carbon,” Ocean Love founder Nikita Shiel-Rolle told us. It reframed what Ocean Love was truly about: not introducing stewardship but making room for it to lead.

Many ecological projects in Africa, such as soil regeneration and coastal conservation, provide immense environmental benefits but lack immediate revenue streams. These projects are therefore considered low-value in financial terms, as they do not generate direct income, which makes them difficult to fund through traditional investment channels. Exacerbating this challenge is the cost of financing in Africa. A solar farm in Germany, for example, needs a return of 7% on capital invested to break even. In Zambia, prohibitive lending rates for businesses raise the necessary return to a staggering 38%, according to the Climate Policy Initiative. Unless financing costs in the developing world are reduced, promising decarbonization projects will remain stalled, as the high price tag will make them economically infeasible.  

How We Make It Work

Pre-sale agreements for climate and environmental monitoring data can provide early-stage investors with assured future revenue streams, thereby enhancing the financial viability of projects. Carbon and biodiversity markets can also play a pivotal role. These markets are designed to channel investment into projects that create environmental credits, such as carbon offsets or biodiversity credits. These credits can be purchased through Article 6 agreements by governments to help meet their own Nationally Determined Contributions (NDC) commitments, or, if structured with integrity, through the voluntary market by companies seeking to fulfill sustainability commitments. By allowing these markets to support non-revenue generating ecological services, they create a mechanism for financing projects that would otherwise remain unbankable.

Importantly, local communities must own and drive these investments, making capacity building up front an imperative. Foreign interests should not be the sole beneficiaries of carbon credits and offtake agreements. When the investment flow bypasses the local community, leaving them with precarious employment without an equity stake in their own future, the long-term impact is diminished. If these projects are to be truly sustainable and equitable, local communities must be empowered to take the lead and gain ownership, ensuring they benefit directly from the ecological services they are providing. Transparency and verified investment data can help reduce the financial risks for investors and unlock capital to support vital ecological services in emerging markets. A recent study by the International Monetary Fund highlighted that greater data transparency leads to a 15% reduction in the spreads on emerging market government bonds, effectively lowering borrowing costs for these nations. 

Why It Matters Now

Ocean Love isn’t just a project. It’s a signal—a signal that even the most aligned climate ventures will stall unless capital is structured to fund the first mile, not just the finish line.

Too often, we fund conservation like it’s a product. But what we’re really funding is access—the ability for communities to participate in the markets that are underpinned by their ecosystems.

That is what offtake agreements, environmental commodities, and investment case studies enable. That is what better sequencing unlocks. That is how we move from promising ideas to investable models, without trading off local ownership along the way.

Arushi Parashar is a finance and strategy professional with close to five years of experience, driven by a passion for shaping sustainable business strategies. With a strong foundation in capital markets and consulting, Arushi has developed a proven ability to analyze financial data and implement strategic solutions that create lasting value.

With climate finance facing renewed scrutiny and skepticism, I appreciated the opportunity to discuss the evolving landscape of capital mobilization for climate solutions at PEI’s Nexus 2025 last week. The discussion with Karine Khatcherian-Pisant from Power Sustainable and PEI’s Toby Mitchenall underscored both the challenges and opportunities in financing the transition to a sustainable economy.

The Bad News:

1. You can price in difficulty, but not uncertainty – Market volatility and policy unpredictability continue to deter investment in climate solutions.
   
2. M&A will remain on hold in this volatile environment – Unstable economic conditions and shifting investor sentiment are delaying major acquisitions.
   
3. Investment strategies (and pitches) must adapt – The era of cheap money is over, requiring businesses to refine their value propositions to attract capital.

The Good News:

1. Dry powder in private equity is aging – With funds between 3-5 years old needing deployment, capital remains available for high-quality, value-add companies. An overallocation in cleantech led to investor caution after recent setbacks, combined with increasing investor scrutiny in general. A more selective investment approach is emerging, with capital allocation focused on scalable and commercially viable projects in the real economy.
   
2. Private credit is forging ahead – Long-term, patient capital is stepping up, providing liquidity in both liquid and less liquid markets.
   
3. GPs are exploring alternative deal structures – Investors are adapting to market volatility and liquidity constraints by developing creative financing mechanisms to mitigate emerging risks.
   
4. Large LPs are diversifying exposure – LPs overallocated from the frothy PE market are now writing smaller checks to diversify commitments, creating opportunities for the kind of smaller, capital-intensive deals that are essential for scaling climate solutions.
   
5. New capital sources are expanding access – The expansion of private wealth participation in PE is reshaping the investment landscape, increasing accessibility for a wider range of investors, many of whom are dedicated to combatting climate change. As platforms democratize access, private wealth is expected to play a pivotal role in shaping the trajectory of the private equity sector.
   
6. Employee ownership transitions are gaining traction – Aligned with PE’s broader efforts to democratize capital access and tap into new sources of private wealth, GPs are actively exploring employee ownership models, which promotes wealth distribution by enabling employees to build equity and share in long-term financial success.

Climate Finance: Trends to Watch 

1. Infrastructure finance will play a crucial role in scaling climate tech, with offtake agreements, performance guarantees, and corporate investments becoming essential mechanisms for de-risking projects and securing long-term viability.
   
2. Insurtech offers specialized insurance products to transfer the risk of increasing frequency and severity of climate-related events, such as wildfires, floods, and hurricanes. New market entrants offer coverage to homes in areas prone to natural disasters using simulation software, insurance solutions using sensor technology to protect temperature-sensitive shipments, and microinsurance to smallholder farmers in emerging markets that leverages advanced data and AI models to keep premiums low.
   
3. Innovation in reinsurance such as catastrophe bonds, weather derivatives, and parametric insurance leverages capital markets to distribute climate risks beyond traditional insurers. These risk transfer instruments offer institutional investors the opportunity to earn competitive returns that are largely uncorrelated with traditional financial markets, providing portfolio diversification while absorbing climate-related risks.

Despite current headwinds, private capital is adapting to new market conditions, and investors continue to seek innovative pathways to fund climate solutions. By refining investment strategies and integrating financial innovations, the climate finance sector can unlock the capital required to drive transformational change and future-proof the global economy. 

Susan McGeachie is CEO of the Global Climate Finance Accelerator, which convenes partnerships across business, finance, government and academia on strategies, policies, procedures, and tools to finance the deployment of technically viable climate solutions. 

In this new year it’s hard to ignore the weight the world carries. In the global landscape, environmental crises that exacerbate ongoing economic challenges and geopolitical tensions feel overwhelming. These realities didn’t pause for fireworks or countdowns. They reminded us of the work ahead.

On a deeply personal level, our loss of a young life that was so full of promise and potential casts a shadow over the hope a new year is meant to inspire. On November 1^st, Isobel Fanaki, my late, beloved cousin’s daughter who I had the privilege of calling my goddaughter, died suddenly while teaching abroad in Japan. Only twenty-five, Isobel’s death is a sharp reminder of dreams and opportunities that can go unfulfilled. 

The glorious flower arrangements at Isobel’s funeral reflected her strength and beauty, but it was one in particular that really caught our attention. By far the most unassuming, it was a symbol for Isobel’s undergraduate thesis, crafted by her former colleagues at the High Park Nature Centre. 

Isobel was a Renaissance thinker like her grandfather, an atmospheric physicist who loved to paint and play his many different musical instruments, including piano and guitar. His PhD thesis, The Study of Heat Flow in The Lower Troposphere by Laboratory Simulation, led him into the early days of climate change research with the Canadian federal government. 

Isobel was also an accomplished artist in addition to her focus on environmental science and ecology. For her biology thesis, she studied the link between the unusual population spike in uncommon mason bees and the abundance of non-native snail shells in Hamilton and parts of Niagara. She and her research colleagues discovered that the shells provide optimal nurseries for the bees’ offspring, allowing them to thrive as the broader population of wild native bees, including the honeybee, remains under threat. The success of these very effective pollinators supports the overall pollination needs of our food system by increasing the quality and quantity of the harvest.

Amid the enthusiastic rush into revitalized biodiversity markets, Isobel’s unassuming discovery is a quiet reminder that substantive outcomes require effort. Appropriately valuing and commercializing nature-based economic enablers demands the steady work and rapid adoption of under-funded yet urgently needed research and observation. 

In her book Medicine Wheel for the Planet, Dr. Jennifer Grenz shares the moment in her ecological restoration career that made her realize she couldn’t keep working solely with a Western science worldview of seeing the world in one way instead of in relation with everything else. Canada’s recent integration of Indigenous knowledge and experiential, land-based learning enabled ecologists to recognize that the invasive European grove snails were benign, eating only dead plants, and therefore should be left alone. Because they were left alone, Isobel and her colleagues were able to further study them and thus identify their usefulness to the Canadian ecosystem.

Isobel’s careful research must be balanced with urgent action. While acting without robust data risks perpetuating inefficiencies and inequities, delaying efforts to refine valuation models risks irreparable damage to critical ecosystems. Proposed solutions include taking immediate steps to protect and restore ecosystems based on current knowledge while investing in research to refine future valuations. Creating the innovative market systems that will help achieve Canada’s 2030 Nature Strategy and biodiversity net gain goals will require a more rapid alignment of science, policy, and finance.

The regret for this lost life is immense, as is the determination to honour Isobel’s memory. 2025 is a year to remember the promise of those we’ve lost – in addition to Isobel there was the sad passing of the catalytic Niilo Edwards in December – by carrying their light forward. It will be a year of uncertainty, but it also offers the hope of progress.  Whether it’s through collective action, innovation, or simply showing up for one another, this is the year to lean into our challenges with courage and optimism – for those we’ve lost, for us, and for the world we strive to build.

Isobel’s mother Janet Fanaki and brother Sam Fanaki have created a memorial fund, which is being used to support the causes Isobel cared about most: Nature conservancy, education, and addressing food insecurity. Donations can be made here. 

Isobel Fanaki studied biology at McMaster University, where she became a Teaching Assistant and was honoured with publishing her final year thesis on the ‘Nesting of local mason bees in empty exotic snail shells’. In addition to lifeguard and swim instructor, Isobel held roles as an Educator at Ripley’s Aquarium and a Teacher with the High Park Nature Centre before moving to Hiroshima, Japan to become an Assistant Language Teacher.

COP29 concluded on November 24, 2024. Referred to as the “Finance COP”, its central focus was on adopting a new climate finance target. Read on to explore the global progress made in climate finance.

This COP started strong, with three major advancements in climate finance negotiations:

• The “Baku Finance Goal” (BFG): A new commitment to channel $1.3 trillion of climate finance to the developing world each year to help address the negative effects of climate change
• Full operationalization of Article 6: Implementing cross border cooperation to reduce the costs of achieving national GHG emission reduction targets by up to $250 billion per year
• Full operationalization of the Loss and Damage Fund: Total pledged financial support now exceeds $730 million, with project financing to help the world’s most vulnerable countries respond to loss and damage starting in 2025

Breaking It Down: What Do These Developments Mean?

1. The Baku Finance Goal (BFG):

• The BFG contains a core target for developed countries to lead on mobilizing at least $300 billion annually for developing countries by 2035. 
  • As background, the previous climate finance pledge, made at COP15, committed to $100 billion annually by 2025. According to an OECD analysis, this goal was achieved for the first time in 2022.

  

• Additionally, Multilateral Development Banks (MDBs) announced the estimation of $170 billion climate finance annually by 2030. This includes $120 billion for low- and middle-income countries and $50 billion for high-income countries. In addition, each group has a target of mobilizing $65 billion annually from the private sector.
• Despite these efforts, gaps remain between the trillion-level goals and billion-level commitments. The COP Presidencies will lead the “Baku to Belém Roadmap to 1.3T” to make progress towards that aim in COP30 next year. Additionally, the Independent High-Level Expert Group on Climate Finance report highlights pathways to bridge these gaps:

2. Article 6 Operationalization: 

• The Paris Agreement’s Article 6 allows countries to collaborate on achieving Nationally Determined Contributions (NDCs) by establishing the framework for an international carbon credit trading marketplace.

  

  • To recap, Article 6.2 facilitates government-to-government carbon credit trading via Internationally Transferred Mitigation Outcomes (ITMOs), and Article 6.4 establishes an UN-backed carbon-crediting program. COP29 also concluded negotiations on Article 6.8 to facilitate internation cooperation through non-market approaches such as capacity-building and technical support.
  • The UN first approved Article 6.4 on day one of COP29, showing a strong signal to move forward and attract more capital. Trading in carbon credits could reduce the cost of implementing countries’ NDCs by more than half – up to $250 billion by 2030, while enabling the removal of 50% more emissions (about 5 gigatons of CO2 per year by 2030) at no additional cost. 
• Voluntary carbon markets may align with Article 6 standards, enhancing transparency and credibility while enabling  high-integrity carbon credits to trade under Article 6. This alignment leverages existing voluntary carbon market infrastructure and supports countries and the private sector in transitioning to Article 6 markets.
• Article 6 is far from perfect at this stage. Negotiations are ongoing, with the deadline to transition Certified Emission Reductions (CERs) from the legacy Clean Development Mechanism (CDM) to Article 6.4 set for 2028. Updates to Nationally Determined Contributions (NDCs) are expected in early 2025.
• While the details will continue to evolve, the uncertainty impeding action has ended. Article 6 now represents an important and tangible tool for scaling up climate finance in developing countries.

3. The Loss and Damage Fund:

• The Loss and Damage Fund is a climate finance mechanism designed to assist developing countries that are particularly vulnerable to the adverse effects of climate change.  It addresses losses and damages caused by climate-induced events such as extreme weather and sea-level rise. 

• Established at COP27, the fund saw $700 million pledged at COP28 and now exceeds $730 million following COP29.
• COP29 formalized critical operational measures, including the appointment of Ibrahima Cheikh Diong as Executive Director and an agreement between the fund’s board and the World Bank. Financing projects are set to commence in 2025.

What Is Canada’s Role in Climate Finance?

• Canada announced  the launch of GAIA during COP29: a US$1.48 billion blended finance platform supporting high-impact climate projects in up to 25 emerging markets and developing economies.

• 70% of the platform will support adaptation projects and 25% will invest in small island developing states and least developed countries.
• GAIA, co-founded by FinDev Canada, Mitsubishi UFJ Financial Group (MUFG), and the Green Climate Fund in 2023, exemplifies innovative financing. Structured to accelerate the availability and accessibility of long-term loans for climate projects, GAIA aims to demonstrate how a blended finance structure that combines commercial, concessional, and grant capital can catalyze private finance at scale to support projects aligned with the Paris Agreement.
• In 2021, Canada doubled its international climate finance commitment from $2.65 billion (2015-2021) to $5.3 billion (2021-2026), including 40% grant and 60% unconditional repayable contributions (akin to concessional loans). 

As COP29 concludes, the progress achieved sets a strong foundation for climate finance, although significant gaps remain. The Global Climate Finance Accelerator addresses these challenges by offering innovative and affordable capital solutions through customized collaboration between partners in business, finance, government, and academia to more effectively mobilize resources. 

Learn more about our work in global climate finance by visiting our Ocean Love project site. Ocean Love is pioneering sustainable and equitable growth in the blue economy by investing directly in the untapped carbon sequestration and biodiversity projection potential of local coastal communities in the Caribbean and East Africa.

Hao Tian is an independent advisor on blended finance solutions for the Global Climate Finance Accelerator. She has nearly a decade of experience in finance and sustainability across global banks and the World Bank Group. As a seasoned leader in finance and sustainability, Hao connects the dots between capital markets, VC, and the public sector across developed and developing markets by exploring collaborative pathways design and innovative blended finance solutions. Hao holds a Master of Finance degree and a Graduate Diploma in Social Responsibility and Sustainability from the University of Toronto, and a Bachelor of Economics degree from the Central University of Finance and Economics. She is a Certified Financial Risk Manager and owns IFRS (ISSB) FSA Credential.