To avoid the worst effects of climate change, we need to end our reliance on fossil fuels and invest in alternative, renewable sources. Despite making up only 25% of total renewable energy investments, public investment is still vital due to its ability to encourage investments through policy measures and programs. In this paper we investigate how institutional quality, together with other financial, economic and policy variables, affects public renewable energy investments in middle-income countries. We account for the non-normal distribution of our data by conducting a panel quantile regression analysis for 64 middle-income countries. We present the results for the 0.25, 0.50 and 0.75 quantiles, representing countries with low, moderate, or high levels of public renewable energy investments. Our main finding is that absence of corruption is a vital factor for public renewable energy investments, regardless of which stage of the renewable energy transition a middle-income country is in. In the light of corruption, potential market failures are discussed as a consequence which can create a downward spiral for further renewable energy investments. Furthermore, better financial stability will increase these investments as well. We also find that public investors seem to be unaffected by economic policy uncertainty, indicating that these investors play an important role in uncertain times when private investors refrain from investing due to the high uncertainty connected to the irreversibility of these investment projects.

Blended finance has the past decade become an increasingly popular way for development banks in Southeast Asia to invest in renewable energy projects with the aim of mobilizing additional private investments. Although definitions of the method differ among stakeholders, blended finance is a way of blending development loans with below-market-rate funds to lower risks experienced by private investors. This relatively unexplored financing approach could be one of the solutions to bridge the large private funding gap the region's renewable energy sector is currently experiencing. This paper investigates if and how blended finance contributes to the diffusion of renewable energy innovation in Southeast Asia, through the mobilization of further private investments. To do this, the de-risking effects of blended finance have been investigated, as well as which stage in the diffusion innovation process blended finance is relevant, and how it contributes to the innovation functions of an energy technology innovation system. Exploratory interviews were held with both regional climate finance experts, as well as with eight blended finance investment executives. The findings from this thesis show that blended finance helps renewable energy technologies in their product commercialization and market formation stage, by targeting first-mover projects. During this stage, renewable energy projects in Southeast Asia experience especially high barriers to attracting private investments, the so-called commercialization valley of death. Further, blended finance contributes to four out of seven innovation functions in the energy technology innovation system: Resource mobilization, knowledge diffusion, creation of legitimacy and market creation. The financial risks of renewable energy projects are being mitigated as the public loans and concessional funds lower costs and create increased returns, leading to projects being more financially attractive for private investors. The perceived risks among private investors are being mitigated through knowledge diffusion and the creation of legitimacy. Development banks spread the knowledge about investments in renewable energy projects, as well as the technology, and the very existence of blended finance investment brings a quality mark for renewable energy projects. The paper additionally found that the lack of a common definition of blended finance leads to a lack of common methodologies, data availability and evaluations of the approach. This in turn leads to little research and difficulties in collaboration among blended finance investors, ultimately resulting in the approach being hard to scale. / Blandfinansiering, eller "blended finance", har det senaste decenniet blivit ett allt populärare sätt för utvecklingsbanker i Sydostasien att investera i projekt för förnyelsebar energi. Blandfinansiering ett sätt att blanda vanliga utvecklingslån med lån med en lägre ränta än marknadsräntan. Syftet är att attrahera och mobilisera mer privata investeringar mot förnyelsebar energi, genom att minska riskerna privata investerare upplever. Denna relativt outforskade finansieringsmetod kan vara en av lösningarna för att överbrygga den stora privata finansieringsklyfta som den sydostasiatiska förnyelsebara energisektorn upplever. Denna uppsats undersöker om och hur bland finansieringbidrar till spridningen av innovationer inom förnybar energi i Sydostasien. Detta genom att undersöka de riskminimerande effekterna av blandfinansiering, i vilken fas in innovationsprocessen blandfinansiering är relevant och hur det bidrar till innovationsfunktionerna inom ett energitekniskt innovationssystem. Explorativa intervjuer hölls med både regionala experter inom klimatfinansiering och med åtta investerare inom blandfinansiering. Resultaten visar att blandfinansiering hjälper förnyelsebar energiteknik i produktkommersialiserings- och marknadsbildningsfasen i innovationsprocessen, genom att rikta in sig på "first-mover" projekt. I denna fas upplever projekt för förnyelsebar energi i Sydostasien särskilt höga hinder för att attrahera privata investeringar, den så kallade "commercialisation valley of death". Vidare bidrar blandfinansiering till fyra av sju innovationsfunktioner i det energitekniska innovationssystemet: Resursmobilisering, kunskapsspridning, legitimitetsskapande och marknadsskapande. Den finansiella risken för förnyelsebara energiprojekt sjunker då blandfinansiering sänker kostnaderna och ökar avkastningen, vilket leder till att projekten blir mer ekonomiskt attraktiva för privatainvesterare. De upplevda riskerna bland privata investerare sjunker genom kunskapsspridning och skapandet av legitimitet. Utvecklingsbanker sprider kunskapen om hur man investerar i förnyelsebara energiprojekt, och utvecklingsbankernas närvaro i projekten skapar trovärdighet. Rapporten fann dessutom att avsaknaden av en gemensam definition för blandfinansiering leder till en brist på gemensamma metoder, datatillgänglighet och utvärderingar av investeringsmetoden. Detta leder i sin tur till lite forskning och svårigheter i samarbetet mellan investerare, vilket resulterar i att blandfinansiering är svårt att etablera på en större skala.