ABU DHABI Jan 17 Financing for renewable energy is increasingly moving away from European investors towards national banks in emerging markets, including Islamic finance, the International Renewable Energy Agency (IRENA) said on Thursday.
The financial crisis of recent years has eroded domination by European banks and utilities, IRENA's Deputy Director-General Frank Wouters said at the World Future Energy Summit in Abu Dhabi.
"Europe has so far dominated renewable finance, but its utilities have had to tighten their books and banks have had to scale down their assets due to increased regulation, but the tab is increasingly being picked up by national banks from emerging markets, and especially Islamic finance," he told Reuters.
Wouters said that preliminary numbers showed that global investment into renewable energy was around $250 billion in 2012, down around 10 percent on the previous year.
"Islamic finance is still far from filling the gap left by the Europeans, but it's already a multi-billion dollar business," Wouters said.
"The Islamic Development Bank alone has over 2 billion dollars invested in renewables, and that's just one bank. Islamic finance is asset based and much less speculative than western models, so renewables and Islamic finance are a good match," he added.
Islamic finance adheres to religious principles such as bans on interest payments and pure monetary speculation.
Wouters also said that he believed the Middle East was on the verge of a large-scale investment boom into renewables.
"They are using diesel fuel to generate electricity instead of selling it on the global market at over $100 (per barrel). That makes no sense, and they know it, so I think we will see a big boom in Middle Eastern renewable investment very soon." (Reporting by Henning Gloystein; Editing by David Cowell)