Energy as the Currency of the 21st Century: Building the Financial Rails for Europe’s Net Zero Future
How to unlock liquidity for green energy assets.
The world is currently investing around $1.7 trillion per year into green energy assets. Yet, according to the International Energy Agency (IEA), reaching net-zero by 2050 will require tripling that annual investment to nearly $4 trillion per year.
At Contrarian Ventures, we’ve been exploring what it will take to bridge that gap. We know that unlocking the full potential of green assets requires more than just inflow of capital; it requires a complete transformation of the financial infrastructure that powers these investments. What are the key barriers? Why is liquidity so hard to achieve? And most importantly, how is energy itself evolving into the financial asset class of the 21st century?
To answer these questions, we’ve developed the Climate Liquidity Stack framework, which breaks down the essential layers of infrastructure needed to scale investment into climate solutions. This article will walk you through:
The Climate Liquidity Stack: Our framework for structuring the flow of capital into green assets.
The current market map: An analysis of different asset classes and their liquidity challenges.
Where we see the biggest opportunities: The venture sectors that are primed for innovation and growth.
Let’s dive in.
Our Mental Model: The Climate Liquidity Stack
The Liquidity Stack is a framework that structures how infrastructure, financing tools, and market mechanisms combine to create liquidity.
Unlocking liquidity involves the following three layers, each building on the next. Here's the breakdown:
Layer 1: Infrastructure & Trust
This foundational layer doesn’t directly move capital but enables liquidity. Think of it as the rails that underpin the entire financial system. Before money can flow into an asset class, the assets themselves must be transparent, standardized, and trusted by investors.
Layer 1 includes tools such as: Data standards and APIs, Risk ratings and project verification (MRV), Registries and interoperability frameworks
Without this base layer, liquidity cannot form as markets need trust and clarity first.
Layer 2: Financing & Risk Products
Layer 2 is where capital is directly channelled into green assets. This is the engine of liquidity, where financing tools like: Lending and revenue-based financing, Insurance products and credit guarantees, Embedded finance solutions or BNPL models are used to move money into the system. Layer 2 is where financing decisions are made, directly supporting the deployment of green assets.
Layer 3: Market Access & Liquidity Pools
Layer 3 brings secondary liquidity, meaning it opens access to capital markets. Once green assets are financed and operational, Layer 3 creates mechanisms that allow investors to trade, aggregate, or exit their positions.
This layer includes solutions like Investment marketplaces, Tokenization and securitization platforms, Carbon, energy, and climate asset exchanges
Layer 3 transforms green assets into financial products that can be traded in capital markets, enabling them to move freely and attract institutional investment.
Liquidity Along the Maturity of the Asset Class
Now that we’ve covered the core layers needed to unlock capital flow, it’s time to examine how these layers apply across different green asset classes. Maturity matters, and the financial infrastructure for green assets varies significantly depending on where the asset stands in its lifecycle.
For highly standardized, mature, and bankable assets like utility-scale renewables, a robust financial infrastructure already exists. These assets benefit from well-established tools across all three layers, with highly developed market structures and transparency. In contrast, emerging assets, like First-of-a-Kind (FOAK) technologies, operate in an underdeveloped financial ecosystem. These technologies face challenges like limited standardization, a lack of transparency, poorly adapted financing models, and illiquid or underdeveloped secondary markets.
To better understand these gaps, we mapped the market by comparing the Liquidity Stack (on the Y-axis) with the maturity of various asset classes (on the X-axis). This spectrum ranges from nascent, FOAK, and esoteric assets, through distributed retail assets and commercial & mid-scale infrastructure, all the way to institutional and bankable assets.
Here’s what we found:
Market Map to Unlock Liquidity for Green Assets
1. Highly Mature Assets Like Utility-Scale Solar and Wind Farms
Layer 1: Infrastructure & Trust
For utility-scale solar and wind farms, the trust layer is highly mature. These assets have decades of performance data, robust Power Purchase Agreements (PPAs), and established engineering standards. Third-party verification, such as Moody’s and S&P credit ratings, ensures transparency and builds trust. This level of consistency and transparency has made these assets highly investable, with low barriers for capital flow.
Example: NextEra Energy, a leader in renewable energy, leverages these mechanisms to attract substantial institutional investment, benefiting from clear performance data and long-term contracts.
Layer 2: Financing & Risk Products
The financing layer for utility-scale assets is well-established, utilizing project finance structures, tax equity, and various insurance products to manage risks. These tools, such as production insurance and political risk hedging, help reduce capital cost and encourage competition among investors. The rise of private equity and capital funds further fuels the growth of this sector.
Example: LevelTen Energy and Pexapark streamline access to renewable energy projects through risk analytics and off-take agreements, driving lower financing costs and fostering greater competition in the market.
Layer 3: Market Access & Liquidity Pools
Secondary liquidity for utility-scale renewable assets is strong. These assets are packaged into YieldCos, providing stable cash flows to investors, and green bonds attract institutional capital. The M&A market for these assets is also robust, with large institutional investors like pension funds and sovereign wealth funds actively involved.
Example: Brookfield Renewable Partners utilizes YieldCos and green bonds to bring renewable energy assets to the public market, providing liquidity and access to a wide range of investors.
US vs. Europe
Both the U.S. and Europe have developed strong financial ecosystems for utility-scale renewables, but they approach it differently. In the U.S., tax equity financing plays a crucial role, particularly with the boost from the Inflation Reduction Act (IRA). Public YieldCos originated in the U.S. and have been vital in providing liquidity. In contrast, Europe relies more heavily on traditional project finance structures and government-backed green incentives through frameworks like the EU Green Deal. While both regions have strong infrastructure, the mechanics differ - tax equity is central in the U.S., while green bonds and public policy are key drivers in Europe.
2. Evolving Assets: Commercial and Mid-Scale Infrastructure (e.g., Commercial Rooftop Solar, C&I Battery Storage, Building Energy Retrofits)
Layer 1: Infrastructure & Trust
For commercial and mid-scale assets, the infrastructure and trust layer is evolving but still inconsistent. Energy savings performance data, whether from commercial rooftop solar, battery storage, or building retrofits, tends to be fragmented, with significant variation in measurement, reporting, and verification (MRV) practices. Emerging technologies like Battery Energy Storage Systems (BESS) + PV hybrids are growing, but they still lack bankability due to unclear or volatile revenue streams.
Companies like kWh Analytics (offering solar risk benchmarking for C&I projects) and Measurabl (providing ESG data for commercial real estate) are working to standardize reporting and improve data transparency. However, technical due diligence for mid-scale projects remains bespoke, and many investors perceive higher performance variability and underwriting complexity. The lack of consistent performance data aggregation is a significant bottleneck to scaling liquidity in this space.
Layer 2: Financing & Risk Products
The financing layer for commercial and mid-scale assets is fragmented, with specialized platforms emerging to channel capital into these projects. Energy-as-a-service models, pioneered by companies like Redaptive, Sparkfund, and Co-Power, allow businesses to adopt clean technologies without upfront capital expenditures, de-risking customer adoption and generating predictable cash flows. These models are helping bridge the financing gap for projects that may have been previously inaccessible due to high capital costs.
However, many SMEs still struggle with limited access to affordable capital due to weak credit profiles or non-standard project structures. Emerging solutions like credit insurance, revenue guarantees, and green lending platforms are helping fill this gap, but the lack of standardized underwriting tools means these solutions are not yet as scalable as they need to be.
Layer 3: Market Access & Liquidity Pools
Secondary liquidity for commercial and mid-scale assets is still in its early stages. While aggregators like Generate Capital and Sunwealth are beginning to bundle commercial energy efficiency and solar projects into investable portfolios, there is little structured securitization of these mid-scale assets compared to their utility-scale counterparts. Green bonds tied to mid-scale building decarbonization projects are still rare. Most liquidity remains in private markets, through direct portfolio sales or forward flow agreements.
US vs. Europe
In the U.S., tax incentives such as the Section 48 Investment Tax Credit under the Inflation Reduction Act (IRA) have significantly catalyzed investment in C&I clean infrastructure. U.S. players have been more active in experimenting with energy-as-a-service models and bundled lease models, which help overcome upfront capital barriers.
In Europe, corporate ESG pressures (under frameworks like CSRD and the EU Taxonomy) are pushing building owners towards decarbonization, but financing solutions are slower to develop due to reliance on traditional bank lending and public incentives. Europe leads in regulatory-driven demand, but the U.S. leads in financing innovation for commercial-scale assets. Both regions, however, face a lack of deep secondary liquidity for mid-scale assets.
Summary
The financial infrastructure for commercial and mid-scale assets is improving but still faces significant hurdles, particularly in the trust layer and market access. Standardization of data and improved financing models will be crucial to unlocking liquidity for these assets. While the U.S. is leading the way with tax incentives and energy-as-a-service innovations, Europe’s regulatory-driven demand presents a promising opportunity for scaling up the financing solutions for mid-scale and commercial projects. Overcoming the gaps in secondary market liquidity, especially for smaller assets, will be key to unlocking capital at scale for this sector.
3. Distributed and Retail Assets: Residential Solar, Home Batteries, Heat Pumps, EV Chargers
Layer 1: Infrastructure & Trust
The infrastructure and trust layer for distributed and retail energy assets is still in its infancy and fragmented. Unlike large utility or commercial projects, residential solar systems, home batteries, and electrification upgrades (such as heat pumps or EV chargers) are often installed as individual units with highly variable performance. Currently, there is no universal, centralized registry or standard to track these systems over time, making it challenging to build investor confidence.
Companies like Arcadia are addressing this gap through utility data APIs, enabling real-time access to household energy usage data. At the same time, WattCarbon and Singularity Energy are creating MRV platforms to track carbon intensity and the impact of distributed assets. However, the lack of standardized, verifiable performance data across millions of small assets remains a major obstacle to scaling liquidity in this sector.
Layer 2: Financing & Risk Products
Financing solutions for residential energy assets have grown rapidly but remain uneven. Embedded point-of-sale lending platforms, pioneered by companies like GoodLeap (in the U.S.) and Enpal (in Germany), allow consumers to adopt solar, batteries, and related technologies with little or no upfront capital. These models are helping to de-risk adoption, but underwriting for newer electrification technologies—such as home batteries, EV chargers, and bidirectional energy systems—is still immature. Traditional credit models, still heavily reliant on FICO scores, do not take into account asset-specific performance data, limiting access to affordable financing.
The cost of capital for distributed assets remains relatively high compared to more established asset classes like utility-scale renewables, which restricts affordability and slows penetration into lower-income customer segments. However, solar loan securitizations (e.g., ABS deals from GoodLeap and Sunlight Financial) are beginning to institutionalize this asset class.
Layer 3: Market Access & Liquidity Pools
Secondary liquidity for distributed assets is still emerging. While solar loan ABS structures have allowed some institutional capital to flow into residential solar portfolios, broader liquidity mechanisms for newer electrification assets (such as home batteries and EV chargers) are almost non-existent. Unlike utility-scale portfolios, there are no widely traded bundles of distributed assets or aggregated home energy savings contracts.
Aggregation models, such as virtual power plants (VPPs), which connect distributed assets to grid markets, are still in their early stages. Companies like Sunrun (with Tesla batteries) and Leap are pioneering these solutions, but the monetization of these assets is still heavily dependent on primary owners and utilities, rather than open, tradable markets.
Example: Enpal has made a significant stride by launching its first green bond, marking a key milestone in aggregating distributed assets and enabling them to enter the capital markets.
US vs. Europe
In the U.S., residential solar adoption has been significantly boosted by strong federal and state incentives, coupled with private-sector innovation in consumer finance models (e.g., GoodLeap and Mosaic). Loan securitizations for solar assets have begun to create early liquidity pathways.
In Europe, the residential clean tech market is more focused on integrated product offerings. For example, Enpal bundles solar panels, batteries, EV chargers, and heat pumps into comprehensive home energy-as-a-service solutions. While Europe is ahead in regulatory-driven demand for clean energy, it lags behind in building securitization and liquidity structures for distributed energy financing.
Both regions face the same challenge: aggregating millions of small assets into tradable, investable products.
Summary
The infrastructure and trust layer for distributed and retail assets is still evolving, with challenges in data standardization and performance verification. To unlock liquidity in this sector, improving transparency and developing standardized MRV systems will be critical. On the financing side, while innovative point-of-sale financing models like those from GoodLeap and Enpal have helped de-risk the adoption of residential solar and energy storage, underwriting tools still need to mature to address emerging technologies like EV chargers and home batteries. Finally, the secondary market for distributed energy assets is still nascent, but the growth of aggregation models such as VPPs offers a promising avenue to enable liquidity.
To truly unlock the potential of distributed assets, the focus will need to be on improving data transparency, developing more affordable financing solutions, and creating robust secondary markets. Both the U.S. and Europe are making strides, but significant challenges remain in turning these small, fragmented assets into tradable, investable products.
4. First-of-a-Kind (FOAK) and Emerging Technologies: Direct Air Capture, Green Hydrogen, Next-Gen Biofuels
Layer 1: Infrastructure & Trust
The trust infrastructure for First-of-a-Kind (FOAK) climate technologies, such as Direct Air Capture (DAC), green hydrogen production, and next-generation biofuels, is still in its infancy. Measurement, Reporting, and Verification (MRV) frameworks are being developed, but there are currently no globally accepted standards to validate carbon removals or hydrogen production outputs. Efforts from companies like Puro.earth (carbon removal registry) and Patch (forward procurement platforms for carbon credits) are beginning to establish digital MRV protocols. However, trust gaps remain substantial: asset performance is uncertain, risk profiles are difficult to model, and technical baselines (e.g., captured carbon per ton or electrolyzer efficiency) are still evolving.
As a result, investors face high uncertainty when underwriting FOAK asset cashflows or impact outcomes, which limits their willingness to commit large-scale capital. Bridging these trust gaps by improving data transparency and establishing clear, standardized MRV systems will be crucial for unlocking investment in these technologies.
Example: Puro.earth is leading the charge by developing a carbon removal registry, providing a foundational layer for trust and transparency in emerging carbon removal technologies.
Layer 2: Financing & Risk Products
Primary financing for FOAK assets is extremely limited and often relies on venture capital, government grants, philanthropic capital, and blended finance structures. Traditional lenders generally avoid FOAK projects due to unproven cash flows and high technical risks. Emerging models, such as the Frontier Fund (supported by Stripe, Shopify, Meta, and others), create demand-side guarantees for future carbon removals, which help new technologies secure financing to scale.
Some emerging insurance models aim to backstop volume risks (especially for green hydrogen or carbon removal delivery shortfalls), but these are still in early development. Overall, the financing infrastructure for FOAK assets is fragmented and ad hoc, relying on bespoke, project-by-project fundraising rather than standardized capital channels. This gap presents a significant opportunity to create more scalable, efficient financing solutions for emerging climate technologies.
Example: Frontier Fund is helping to create demand guarantees for carbon removal technologies, acting as a critical bridge for early-stage capital.
Layer 3: Market Access & Liquidity Pools
Currently, there is no true secondary market for FOAK assets. While carbon removal credits from DAC or enhanced weathering projects can sometimes be sold through bespoke contracts, these transactions are still negotiated bilaterally rather than traded in open markets. Early experiments in tokenization (e.g., Toucan Protocol for blockchain-based carbon credits, Flowcarbon for carbon-backed tokens) are attempting to create tradable liquidity for emerging assets, but adoption remains limited, and credibility concerns persist.
Without standardized MRV, trusted pricing benchmarks, or credit ratings, FOAK assets remain highly illiquid, with most capital committed to these assets locked in long-term, patient positions with no clear exit pathways. Establishing a secondary market for these assets will be a crucial next step in unlocking their liquidity.
Example: Flowcarbon has started experimenting with tokenizing carbon credits, but broader market acceptance is still in early stages, and standardized MRV and pricing mechanisms are needed to foster wider adoption.
US vs. Europe
The U.S. has emerged as a leader in FOAK climate financing, driven by deep venture capital markets (e.g., Breakthrough Energy Ventures, Lowercarbon Capital) and major federal policy incentives such as the 45Q tax credit for carbon capture and IRA funding for hydrogen hubs. These factors have created an environment where FOAK technologies can attract significant private capital.
In Europe, while venture-scale risk-taking has historically been slower, the region is catching up with large public funding mechanisms such as the EU Innovation Fund and upcoming Carbon Contracts for Difference (CCfD), designed to de-risk early-stage decarbonization technologies. Both regions recognize the critical need to build financial infrastructure for FOAK assets, but global markets are still in the early stages of developing the necessary trust, capital flow, and liquidity structures.
Summary
The financial ecosystem for FOAK climate technologies is still in its infancy. While early efforts in MRV standardization, financing models, and secondary market development are promising, trust gaps and uncertainty around performance remain major obstacles to scaling investment. To unlock liquidity in FOAK assets, there is a need to establish standardized MRV systems, create demand-side guarantees, and develop secondary markets that allow investors to trade these assets more freely. Both the U.S. and Europe are making strides, but global coordination and innovation will be needed to build the necessary infrastructure to scale FOAK investments and unlock their full potential.
Conclusion: Key Opportunities to Unlock Liquidity for Green Capital in Europe
To unlock the trillions needed to transition to net-zero, we must build the right financial infrastructure. Based on the Climate Liquidity Stack, we’ve identified critical gaps in the current market that represent key opportunities to unlock liquidity and scale green capital in Europe.
Data Standardization & MRV: Developing standardized data and Measurement, Reporting, and Verification (MRV) frameworks for emerging technologies like carbon removal and green hydrogen will build trust and transparency, enabling investor confidence.
Financing Solutions for SMEs & Residential Markets: Creating scalable financing models—such as embedded finance solutions, green home loans, and point-of-sale financing for electrification—will provide much-needed capital to small and medium enterprises (SMEs) and residential customers.
Carbon Credit Registries & Tokenization: Establishing interoperable carbon credit registries and tokenization platforms will unlock liquidity in carbon markets and create tradable assets for institutional investors.
Aggregation Platforms for Mid-Scale Assets: Developing platforms to bundle smaller projects, like commercial rooftop solar and building retrofits, into investable portfolios will open the door for institutional investment in mid-scale energy assets.
Revenue-Backed Lending for Emerging Assets: Introducing revenue-backed lending and risk-sharing platforms for First-of-a-Kind (FOAK) technologies will de-risk investments and provide financing for innovative green assets.
Unlocking the Future of Green Capital
To meet Europe’s Net Zero goals, critical infrastructure must be built now. Innovators, financiers, and entrepreneurs have a unique opportunity to shape the future of green finance and unlock capital for the energy transition.
If you're working on innovative financial solutions, whether in data, financing, aggregation, or market access, with a focus on Europe, we want to hear from you. The next decade depends on the financial systems we build today. Contact us at robina@cventures.vc to explore how we can collaborate to accelerate the green economy transition.