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Derisking Renewable Energy Investment Framework
Derisking Renewable Energy Investment (DREI) introduces an innovative, quantitative framework to assist policymakers in developing countries to cost-effectively promote and scale-up private sector investment in renewable energy.
The DREI framework systematically identifies the barriers and associated risks which can hold back private sector investment in renewable energy. It then assists policymakers to put in place packages of targeted public interventions to address these risks. Each public intervention acts in one of three ways: either reducing, transferring or compensating for risk. The overall aim is to cost-effectively achieve a risk-return profile that catalyses private sector investment at scale. The end result is reliable, clean and affordable energy solutions in developing countries.
The DREI framework consists of a suite of publicly-available methodologies, financial tools/models and resources. Current renewable energy sectors covered by the DREI framework are (i) utility-scale, (ii) on-grid rooftop PV, (iii) off-grid mini-grids, and (iv) solar home systems.
DREI in Action: By the Numbers
Under DREI 1.0, UNDP worked with over 20 countries, helping them identify investment risks, develop tailored derisking strategies and unlock private capital for renewable energy projects.
Taking DREI to the Next Level
DREI 2.0 is an evolution of this work, building on experience and lessons learned through previous implementations of DREI 1.0 (since 2015), while adapting to current market needs. It offers a structured, investor-informed, and action-oriented process to design more effective derisking strategies. Through DREI 2.0, UNDP offers countries a pathway to move beyond analysis and into real-world implementation–bridging the gap between political commitments and investor-ready projects that deliver clean, affordable, and reliable energy for all.
Why is DREI 2.0 needed?
- Without urgent action, 666 million people, most of them in sub-Saharan Africa, could still lack access to electricity by 2030. Bridging the investment gap is therefore not only a climate imperative, but also central to achieving Sustainable Development Goal 7, unlocking job creation, productivity gains, and increased resilience.
- Many governments still lack structured tools to identify and prioritize these investment risks. Without this understanding, policy responses are often ad-hoc, misaligned with investor realities, and unable to translate renewable energy commitments – including Nationally Determined Contributions (NDCs) – into concrete, viable projects. This gap not only stalls climate progress, but also limits opportunities for economic growth, job creation, and improved livelihoods.
- Although a wide range of policy support, capacity-building, and financial de-risking tools exist, governments often struggle to coordinate and prioritize them due to overlapping initiatives and competing agendas.
- At the same time, public and private stakeholders often operate with divergent perceptions of risk according to their priorities, and few mechanisms exist to bring both sides into structured, data-informed dialogue. This disconnect further complicates efforts to design effective enabling environments and mobilize capital at scale.
The DREI 2.0 Approach: Three Integrated Elements
DREI 2.0 is UNDP’s full-service, end-to-end offering designed to help governments understand investor risks, co-create actionable solutions and develop tailored derisking strategies grounded in investor insights. At its core, DREI 2.0 combines three integrated elements:
What DREI 2.0 Delivers
DREI 2.0 delivers a dual impact: generating actionable insights to guide renewable investment decisions, and cultivating a community of public leaders equipped with a de-risking mindset.
Actionable DREI Findings
- Quantitative analysis of investment risks, de-risking instruments, and financing costs
- A graphical and accessible methodology
- Concrete, practical, and actionable outputs to inform decision-making
Community of Leaders with a Derisking Mindset
- Empowering public officials to understand how the private sector perceives risk and makes decisions
- Supporting more effective engagement and negotiation between public and private actors
- Building a shared foundation for long-term energy planning and investment
DREI Offerings and Benefits for Governments
- Through this combined offer, DREI 2.0 moves beyond one-off analysis. It creates a shared language of risk between the public and private sectors, increases trust and alignment, and helps institutional actors move toward policies and partnerships that are truly investment-ready. It is underpinned by UNDP’s convening power, technical expertise, and broad network of partnerships across the global energy finance ecosystem.
- Importantly, the knowledge, tools, and “derisking mindset” developed in the Lab are internalized within institutions — not just individuals. The lab process is designed to build institutional memory and cross-ministerial collaboration, helping mitigate the risk of knowledge loss when personnel change roles.
DREI Country Applications
DREI Resources and Tools
UNDP, collaborating with its partners, is continually further developing and refining the DREI framework. The following resources and materials are currently available:
