Structuring Climate Capital: What Will It Take to Unlock Green Investment in the Maldives?

What does it take to cut the price of solar power in the Maldives by more than half? Under the World Bank’s ASPIRE programme, solar tariffs fell by approximately 53 percent, from USD 0.21 per kWh in the first phase to USD 0.0988 in the third, according to the Climate Investment Funds. Part of the answer lies in how the projects were financed.

ASPIRE, short for Accelerating Sustainable Private Investments in Renewable Energy, was approved by the World Bank in 2014 with the aim of increasing solar power generation in the Maldives through private-sector investment. It supported private solar investors with arrangements to share some of the risks they would otherwise carry. Over its phases, solar tenders grew from 1.5 MW to 5 MW and then 11 MW, drawing greater investor interest. The 11 MW project attracted 63 investors, and it supports six population centres, according to the Climate Investment Funds.

The Maldives has demonstrated that sustainable projects can attract private investment. But turning individual successes into investment at scale is a different challenge. A project may offer clear environmental and economic benefits, but these alone do not guarantee financing. Investors need confidence in its financial viability, its potential returns and the risks involved.

Building that confidence is the central task for green finance in the Maldives, and it is a large one. Climate mitigation alone will require more than USD 800 million a year, Maldives Monetary Authority (MMA) Governor Ahmed Munawar stated in December 2025. Public financing will remain central to the effort, but it will need to be supplemented by private, concessional financing and market-based financing.

Fuel imports add urgency. Petroleum imports reached approximately USD 710 million in 2025, according to Maldives Customs Service data published by the MMA, and the Maldives has set a national target of generating 33 percent of its electricity from renewable sources by 2028. Meeting that target will require investment structures that can attract private capital, backed by effective risk-sharing, clear regulatory frameworks and a financial sector equipped to finance sustainable development.

Making projects investable

Private capital will only follow if the risks look manageable. For projects in emerging markets, concerns about construction delays, payment security and currency convertibility can deter institutional investors, including pension funds and international asset managers, even where the environmental and economic benefits are significant.

Blended finance is one way to ease those concerns. It combines commercial financing with support from development partners to reduce certain investment risks and attract private capital.

ASPIRE shows how this can work. Its risk-sharing arrangements for private solar investors included USD 16 million in International Development Association (IDA) guarantees, payment security arrangements and provisions addressing currency convertibility risks. The programme also received a USD 11.7 million grant from the Climate Investment Funds’ Scaling Up Renewable Energy Programme.

Each measure speaks to a specific worry. Guarantees from the IDA, part of the World Bank, act as a safety net, so investors are less exposed if something goes wrong. Payment security arrangements give investors more confidence that they will be paid for the electricity they supply. Provisions on currency convertibility address the risk that investors cannot convert their earnings into foreign currency. Together, these measures helped lower investment barriers and create more favourable conditions for private-sector participation in renewable energy. The results illustrate the potential of this approach: solar tariffs had more than halved by the third phase.

Capital is not the only question. The Maldives has shown it can attract foreign investment more broadly, with inflows of approximately USD 806 million in 2024 and an estimated USD 857 million in 2025, according to MMA balance of payments data. The task is to develop and structure sustainable projects so that domestic and international investors can take part. Developers and businesses have a part to play too, by identifying opportunities and preparing financially viable projects.

Opportunities and frictions

The opportunities span renewable energy, energy efficiency, water infrastructure and sustainable tourism. They include solar energy with battery storage on inhabited islands, floating solar installations, energy-efficiency upgrades for resorts and guesthouses, desalination infrastructure and marine conservation initiatives linked to tourism. Provided suitable financing models can be developed, they may extend to climate-resilient infrastructure such as coastal protection and water security.

The potential is particularly significant for tourism, which contributes more than 28 percent of GDP directly and more than 60 percent when indirect effects are included, according to a September 2025 report by the EU-funded PROMISE project.

Yet several barriers limit access to green finance, particularly for smaller businesses across the atolls. The PROMISE report identifies high upfront investment costs, limited collateral, complex loan application procedures and gaps in financial institutions’ technical capacity to assess green projects. The geographic spread of the islands raises the cost of delivering financial services further.

These challenges reflect wider constraints. The World Bank’s 2024 Financial Sector Assessment estimated the financing gap for micro, small and medium enterprises at approximately MVR 11.1 billion in 2022, around 11.5 percent of GDP, as cited in the MMA’s National Financial Inclusion Strategy 2026–2030. Access to finance is also uneven. The strategy notes that nearly 59 percent of the population lives outside Greater Malé, while 58 bank branches served the country’s 20 atolls at the end of 2024.

Addressing these barriers will require financing solutions that respond to the circumstances of businesses and communities in different regions. Financial institutions will also need the expertise and products to assess and support sustainable projects. Expanding green finance beyond established corporate borrowers will be particularly important if sustainable investment is to support broader economic development.

The architecture of capital

Long-term investment also depends on the credibility of the financial market. Investors need clear definitions, consistent disclosures and regulatory certainty. Without shared standards for what qualifies as a sustainable investment, investors face greater uncertainty and the risk of greenwashing, while credible projects may struggle to stand out.

The Maldives has already taken steps towards building this foundation. In October 2024, the Capital Market Development Authority (CMDA) launched the Maldives Sustainability Reporting Framework, introducing a phased approach to sustainability disclosures by listed companies. The MMA has begun work towards a national green finance taxonomy, intended to provide clearer definitions and standards for sustainable financial activities. Its National Sustainable Finance Roadmap, launched in December 2025, identifies priorities including a taxonomy aligned with international standards and frameworks for green, social and sustainability-linked lending. Together, these initiatives can help improve transparency and strengthen investor confidence.

For long-term institutional investors such as the Pension Office, a well-developed green finance market could create additional opportunities for investment diversification while supporting sustainable economic development. In a 2024 review of the Maldivian financial sector, the World Bank and the International Monetary Fund recommended that the CMDA, which supervises pensions, consider climate-risk and sustainability guidelines for pension investment. Any potential investment would be assessed on its merits, including governance standards, and protecting the long-term financial interests of pension members must remain the priority.

From discussion to action

These opportunities and challenges will be explored at the 13th edition of The Maldives Finance Forum 2026, organised by the Pension Office in collaboration with UNDP Maldives.

The Forum takes place on 14 November 2026 at dusitD2 Feydhoo Maldives, under the theme “Green Finance: Unlocking Sustainable Investment and Financial Security in the Maldives.” It will bring together policymakers, regulators, financial institutions, investors and development partners to examine the financial and regulatory conditions needed to advance sustainable investment. Discussions will consider how investment risks can be addressed, how financial markets can support green investment opportunities and how institutions can work together to mobilise long-term capital.

Advancing green finance will require coordinated efforts across government, regulators, financial institutions, investors, development partners and the private sector. Through The Maldives Finance Forum 2026, the Pension Office aims to bring these priorities into focus, encouraging meaningful dialogue and collaboration towards a more resilient economy and a stronger foundation for sustainable investment in the Maldives.