Opportunities in Emerging Energy Transition Sectors under Current US Policy

Emerging clean energy technologies such as enhanced geothermal systems and sustainable aviation fuels are the future of the energy transition. However, many of the aforementioned technologies face challenges with scaling due to investors viewing them as risky bets.

This Capstone project aimed to reveal pathways for private capital financing in six emerging technologies: enhanced geothermal systems, biofuels, sustainable aviation fuel, clean hydrogen, carbon capture, and small modular reactors. Through interviews with 20 developers and extensive desk research, the team analyzed 13 case studies that showed how developers have derisked projects, attracted structured finance opportunities, and created a path for commercializing emerging clean energy technologies.

The client, BBVA’s U.S. Infrastructure and Project Finance group, was interested in near-to-medium term structured finance opportunities in less mature energy transition sectors that are favored under the Trump administration’s One Big Beautiful Bill.

The report began with a description of how clean energy subsidies have changed from the Inflation Reduction Act to the One Big Beautiful Bill and how these changes have benefited or harmed the economics in each energy sector. Following that, each sector’s case studies were explained and evaluated for the bankability of the sector according to technology risk, market and demand risk, feedstock or resource risk, and regulatory risk. This approach helped lenders and investors understand which risks are financeable, which risks require policy support, and whether the technology remains too premature for non-recourse debt financing.