One. Current Situation of Overseas Green Energy Market

In recent years, the global green energy transition has continued to advance, and the market scale has been expanding. According to data from the International Renewable Energy Agency, global investment in green energy reached $1.9 trillion in 2023, a 65% increase from 2020, with photovoltaic, wind power, and hydrogen energy accounting for more than 80% of the total.

In terms of investment hotspots and technological directions, wind and solar energy take the lead, accounting for 60% of new energy investment. China's photovoltaic module exports account for 80% of the global market, demonstrating its strong strength in this field. Energy storage and hydrogen energy are rising rapidly, with global energy storage investment increasing by 40% in 2023. Green hydrogen projects have been intensively implemented in the EU, the Middle East and other regions, becoming new growth highlights. At the same time, the transformation of old power grids and cross-border power interconnection projects have become new demand points for grid upgrading, driving relevant investments.

In terms of capital structure, a diversified trend has emerged. Special green energy funds have been established by the Saudi Public Investment Fund, Singapore's Temasek Holdings and other institutions, injecting substantial capital into the industry. Multilateral financial institutions such as the Asian Infrastructure Investment Bank have also continuously increased the proportion of green project loans, providing financial support for green energy development through multiple channels.

In terms of investment and financing models, continuous innovation has been witnessed. The traditional EPC+F model is gradually shifting towards integrated investment, construction and operation. Green bond issuance has become increasingly frequent, and new financing methods such as asset securitization have begun to emerge, providing green energy enterprises with more diversified choices.

Two. Opportunities for RMB Financing in Overseas Green Energy Sector

2.1 The development of new energy coincides with the strategic window period for RMB internationalization

The global economic landscape is accelerating its evolution toward multipolarity. Emerging economies are playing an increasingly significant role in the world economic landscape, and their demands for diversification of the international monetary system have become more intense. To avoid potential threats to their economic security from geopolitics, some countries are actively seeking diversified paths for economic cooperation and currency selection. Against this backdrop, the joint construction of the "Belt and Road" Initiative has advanced steadily, greatly strengthening economic ties between China and countries along the routes. This has opened up broad regional space for the internationalization of the RMB, with the scope of RMB use in cross-border trade and investment continuing to expand. The proportion of RMB settlement in "Belt and Road" countries has risen to 19%. These favorable external environments have created conditions for the RMB to play a more critical role in international economic exchanges, prompting countries to increasingly incorporate the RMB into their settlement, investment, and reserve currency systems to reduce reliance on traditional strong currencies.

At the domestic policy level, the Chinese government attaches great importance to and vigorously promotes the internationalization of the RMB, having successively introduced a series of policy measures to support the cross-border use of the RMB and promote the development of offshore markets. The 2025 Work Conference of the People's Bank of China clearly stated that it would steadily and solidly advance RMB internationalization, further enhance the international monetary functions of the RMB, give full play to the roles of currency swaps and RMB clearing banks, and actively promote the prosperous development of offshore RMB markets. As of the end of 2024, China had signed currency swap agreements with more than 40 countries and authorized 34 RMB clearing banks in 32 countries and regions, covering major global financial centers. This has established an efficient and convenient cross-border RMB clearing and settlement network, laying a solid foundation for the extensive use of the RMB overseas.

In terms of financial institutions promoting the collaborative development of green finance, China has achieved remarkable results in the issuance of green bonds, ranking second in the world in terms of issuance volume. Offshore RMB centers such as Hong Kong, China and Singapore have deeply participated in green projects. Through financial instruments such as Panda Bonds and Dim Sum Bonds, they have provided diverse financing options for issuers of overseas green projects, strongly promoting the collaborative progress of RMB internationalization and green finance, and creating favorable opportunities for introducing RMB financing for overseas green energy projects.

2.2 RMB financing has cost and risk hedging advantages in the current international situation

With Trump's re-inauguration as U.S. President, trade disputes between the United States, China, Japan, and its North American neighbors have continued to escalate, while global industrial policies are undergoing dynamic adjustments. These factors have significantly intensified global trade tensions, pushing global trade disputes into a more intense new phase, with the risks of financial system and supply chain fragmentation triggered by trade competition becoming increasingly prominent. Large-scale new energy infrastructure projects require huge upfront capital investment, and their returns are significantly affected by fluctuations in construction costs, placing extremely high demands on cost control. Currently, U.S. dollar interest rates fluctuate frequently and remain at a relatively high level for a long time, directly squeezing the profit margin of projects.

China dominates the global photovoltaic (PV) industry supply chain, accounting for approximately 85% of global silicon material production capacity and about 70% of inverter production capacity. In overseas green energy projects, it has become feasible to directly pay Chinese enterprises for equipment and EPC contract fees in RMB, with the proportion of RMB payments at the project procurement end exceeding 60%.RMB financing can provide a relatively stable interest rate environment, which aligns with the long-term planning and operational needs of green energy projects, helping to reduce financing costs. Obtaining financing from Chinese financial institutions naturally forms a capital closed-loop of "RMB-denominated pricing - Chinese supply chain - overseas power stations," effectively avoiding risks caused by fluctuations in international currency exchange rates and enhancing the stability and predictability of project cash flows.

Three. Challenges of RMB Financing in Overseas Green Energy Sector

3.1 Shortage of offshore RMB repayment sources and insufficient convenience

In the global currency settlement system, the U.S. dollar still occupies a dominant position, with most countries highly dependent on the dollar for trade settlements. Currencies such as the euro and the Japanese yen also wield significant influence in the field of international settlement. In contrast, the international acceptance of the Chinese yuan (RMB) still needs further improvement, and the willingness of overseas sovereign states and enterprises to hold RMB remains relatively weak. The overall size of the offshore RMB fund pool is limited, with RMB liquidity shortages in some regions, and the RMB's share in global foreign exchange reserves still remains below 3%.

In terms of cross-border payments, RMB settlement faces numerous obstacles. Some countries have compliance restrictions related to RMB settlement, and their local currencies have not been fully connected to the Cross-border Interbank Payment System (CIPS). Compared with mature international payment and clearing systems, CIPS still has certain gaps in coverage, processing efficiency, connectivity, etc., which to some extent affects the settlement speed and convenience of cross-border RMB financing. In addition, the RMB recycling mechanism is not yet perfect, and the channels for fund repatriation are not smooth enough, restricting the efficient flow of RMB in cross-border financing cycles.

3.2 The RMB still lacks depth and breadth in international financial markets

When compared with major international currencies such as the U.S. dollar and the euro, China's financial markets have gaps in terms of product variety, trading volume, market liquidity, and other aspects. In terms of key elements of financial markets, China lacks a stable benchmark interest rate, leading to increased uncertainty in RMB financing rates. When providing RMB financing services to clients, financial institutions often need to use swap transactions to manage risks, which not only increases the volatility risk of financing costs but also adds to the difficulty of liquidity management. This weakens the attractiveness of the RMB as an international financing currency and makes it difficult to fully meet the diversified and personalized needs of different investors and financiers.

In the field of green finance, there are differences between Chinese and foreign green bond standards. Domestic green bond standards vary from international standards in terms of project definition, environmental benefit assessment, etc., which may limit the recognition of China's green bonds in the international market. To some extent, this hinders the deep integration of China's green finance with the international market, becoming a potential barrier for China to align with international markets in the green finance sector. This is not conducive to overseas green energy projects obtaining RMB financing through issuing green bonds and other means.

3.3 Innovation in risk assessment and risk hedging tools lags behind

Green energy projects have unique risk characteristics, and quantitative models for evaluating their environmental benefits and financial risks remain immature during the project assessment process. Currently, the global power market is undergoing profound transformation: the term of new energy power purchase agreements (PPAs) is gradually shortening, subsidy policies are being phased out, and the proportion of spot market transactions is continuously increasing. These changes have significantly heightened the revenue uncertainty of green energy projects.

In terms of RMB financing, the lack of mature derivative hedging tools for the linkage mechanism between RMB floating-rate loans and electricity price fluctuations makes it difficult for Chinese financial institutions to effectively assess and manage the interest rate risks of green energy projects, thereby influencing their risk assessment and financing decisions for such projects. The shortage of quantitative risk assessment methods and the lag in innovative risk response products have severely constrained the scale expansion of RMB financing for green energy projects, failing to fully meet the diversified financing needs of these projects.

Four. Case Study on 1GW Photovoltaic Project in Uzbekistan

The 1GW photovoltaic project in Uzbekistan invested and constructed by China Energy Engineering Group Overseas Investment Co., Ltd. holds significant demonstrative significance. Following the first China-Central Asia Summit in 2023, this project stands as the first large-scale new energy initiative invested and built by Chinese enterprises in Central Asia. It is also the largest photovoltaic project invested in by Chinese enterprises within the framework of the Belt and Road Initiative in Central Asia, receiving high praise from the President of Uzbekistan and being listed as a "new energy benchmark project".

The project achieved full-capacity grid connection by the end of June 2024, with an average annual power generation of approximately 2.4 billion kWh. During its construction and operation, it provided over 1,600 local employment positions and is expected to generate $140 million in tax revenue, effectively promoting Uzbekistan's energy structure transformation and driving the rapid development of the local social economy.

In terms of the financing model, given that U.S. dollar interest rates remained at a relatively high level and U.S. dollar financing costs would severely squeeze the project's profits, the project innovatively adopted a "RMB project financing" model. The financing was provided by a syndicate of banks including China Construction Bank, Bank of China, Export-Import Bank of China, and Minsheng Bank, which offered non-recourse project financing for the project. The financing amount reached 3.3 billion RMB, with a loan term of 15 years. The security of funds was ensured through means such as equity pledge, project asset pledge, and pledge of electricity revenue accounts. Meanwhile, Sinosure issued medium- and long-term export buyer credit insurance to the financing banks, with the compensation ratio for both political risks and commercial risks reaching 95%, effectively reducing financing risks. The project successfully promoted the cross-border accumulation of RMB and formed an offshore RMB asset pool, providing valuable practical experience for RMB financing of overseas green energy projects.

The prevention and control mechanism for financing risks in the early planning of the project is crucial. At the project initiation stage, investors carried out comprehensive currency arrangements and risk prevention and control planning for project capital investment, revenue, and repayment. In terms of the host country government's sovereign guarantee, the government is required to promise that when foreign exchange cannot be obtained through commercial channels, it will convert the local currency electricity fees earned by the project, providing a solid guarantee for the project's repayment sources. This effectively avoids exchange rate risks and foreign exchange conversion risks, ensuring the smooth implementation of RMB financing and the stable operation of the project.

Five. Exploration of RMB Financing Paths in Overseas Green Energy Sector

5.1 Strengthening Policy Support and International Cooperation

The government should further intensify policy support for RMB financing in overseas green energy sectors. On the one hand, it should continue to improve the policy system for cross-border RMB use, simplify cross-border RMB settlement procedures, and reduce the compliance costs of cross-border RMB businesses for enterprises. For example, special preferential policies for RMB financing of green energy projects can be formulated, with appropriate exemptions in taxes, handling fees, and other aspects. On the other hand, it should actively carry out currency cooperation with other countries, expand the scale and scope of currency swap agreements, and enhance the liquidity and availability of RMB overseas.

In terms of international rule-making, China should actively participate in the formulation process of international green financial standards, and promote the convergence and mutual recognition of Chinese and foreign green financial standards. It should strengthen communication and coordination with international financial organizations and regulatory authorities of various countries, fully express China's views and contribute China's wisdom in key areas such as green project definition, environmental benefit assessment, and information disclosure, so as to enhance China's discourse power in the international green financial field and create a more favorable international regulatory environment for RMB financing of overseas green energy projects.

5.2 Deepening Financial Market Reform and Innovation

We should accelerate the reform of domestic financial markets, enrich the types of RMB financial products, and enhance market liquidity. Vigorously develop the RMB derivatives market, and launch financial derivatives that match the risk characteristics of green energy projects, such as RMB-electricity price swap contracts and green energy project revenue rights futures, so as to provide effective risk hedging tools for financial institutions and enterprises and reduce RMB financing risks. At the same time, strengthen the construction of financial market infrastructure, improve the credit rating system, enhance market transparency, and boost the confidence of international investors in the RMB financial market.

Innovate RMB financing models for green energy projects and explore the application of new financing methods such as asset securitization and green REITs in overseas green energy projects. Take asset securitization as an example: cash flows such as future electricity revenue and subsidy income from overseas green energy projects can be packaged, and asset-backed securities can be issued through special purpose vehicles (SPVs) to attract domestic and foreign investors, broaden project financing channels, and improve capital use efficiency.

5.3 Strengthening the Service Capabilities of Financial Institutions

Financial institutions should strengthen their capacity building and enhance their risk assessment and management capabilities for overseas green energy projects. They should establish specialized green energy project assessment teams to deeply study the technical characteristics, market trends, and risk profiles of the green energy industry, and use advanced risk assessment models and tools to comprehensively and accurately evaluate the project's economic feasibility, environmental benefits, repayment capacity, etc. At the same time, they should strengthen monitoring and analysis of international political and economic situations, adjust risk management strategies in a timely manner, and effectively respond to various risks.

Strengthen cooperation and collaboration among financial institutions to form a joint force. Various financial institutions such as commercial banks, policy banks, insurance companies, and financial leasing companies can provide comprehensive financial services for overseas green energy projects through syndicated loans, joint insurance, financial leasing and other means. For example, policy banks play a policy guiding role by providing long-term and low-cost funds; commercial banks provide working capital support for projects; insurance companies provide risk protection; financial leasing companies meet the equipment needs of projects through equipment leasing and other methods, jointly promoting the development of RMB financing business for overseas green energy projects.

5.4 Enhancing Corporate Strength and Risk Management Capabilities

Enterprises engaged in overseas green energy projects should continuously enhance their own capabilities, strengthen technological innovation, and improve the core competitiveness of projects. They should increase investment in new energy technology research and development, enhance the energy conversion efficiency of projects, reduce operating costs, and strengthen the profitability and repayment ability of projects. At the same time, they should strengthen internal management, optimize the corporate governance structure, and improve the operational efficiency and management level of enterprises.

Strengthen risk management awareness and establish a sound risk management system. Enterprises should formulate comprehensive risk response strategies for political risks, exchange rate risks, market risks, and other risks faced by overseas green energy projects. Before making project investment decisions, conduct thorough risk assessments and feasibility studies; during project implementation, monitor risk changes in real time and adjust risk management measures promptly. For example, effectively reduce risk losses by purchasing political risk insurance, using financial derivatives for exchange rate hedging, and other means to ensure the stable operation of projects and the smooth repayment of RMB financing.

Against the backdrop of the global efforts to address climate change and vigorously develop green energy, RMB financing in overseas green energy sectors is faced with both opportunities and challenges. Through multi-dimensional approaches, including strengthening policy support and international cooperation, deepening financial market reform and innovation, enhancing the service capabilities of financial institutions, and improving corporate strength and risk management, it is expected to break through the current dilemmas, promote the sustained growth of RMB financing for overseas green energy projects, achieve a positive interaction between the development of the green energy industry and RMB internationalization, and contribute China's strength to the global green and low-carbon transition.