Financial Risks (LCT & RES)

As urban-based investment in low carbon technologies and renewable energy sources are reliant on private investment, they become business decisions. An important factor that can hinder investment is the high level of financial risk associated with these new technologies. All investments are subject to risk, but the novel nature of clean energy technologies and their low diffusion rate makes the prediction of investment return very difficult to assess. 

Underdeveloped Market

The dissemination of low carbon technologies and renewable energy sources is hindered by the small market size for these products. The underdeveloped market conditions lead to an uncompetitive environment and prevent large-scale production, therefore creating genuine ‘market barriers’ to the penetration of these technologies in the overall energy market. The current conditions of the energy market favour the usage of conventional sources, which are strikingly easier to implement than the more environmentally friendly alternatives. Moreover, the energy production and distribution in urban areas is largely monopolized by the more traditional industries, which are often promoted through excessive and inefficient regulations.

Without a fully-fledged market for renewable and low carbon technologies, these unconventional products are unlikely to become more widely used. A series of policies and regulation is needed in order to facilitate market penetration and to break down the advantages that the current system fosters for conventional energy sources. 

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