How international lenders and Chinese companies are mutually dependent in scaling green energy projects
Driven by growing domestic overcapacity, many Chinese companies are expanding their global operations. Renewable power and distribution projects in emerging markets account for a large share of these activities, and Chinese companies now account for a dominant share of the world’s renewable energy and battery supply chains. However, to keep the outbound engine running, Chinese original equipment manufacturers (OEMs) and engineering, procurement, and construction (EPC) contractors need access to more capital and diversified funding sources.
The growing financial needs of Chinese OEMs and EPCs coincide with the increasingly ambitious plans of international lenders — such as commercial banks, export credit agencies (ECAs), and multilateral development banks (MDBs) — to finance the deployment of renewable energy infrastructure in emerging markets. Aware that Chinese companies are indispensable to delivering these projects, international lenders are increasingly open to supporting their expanding outbound activities.
It is clear that international lenders and Chinese companies urgently need each other to realize their ambitions in emerging markets. The international environment and social (E&S) standards that international lenders adhere to are a crucial factor in negotiations, and integrating these standards from the outset will be critical to achieving successful partnerships.
The cost competitiveness of Chinese OEMs and the execution capabilities of Chinese EPCs are unparalleled, making them indispensable for delivering renewable and grid infrastructure projects in emerging markets—especially in Africa, Central Asia, and South-East Asia. These comparative advantages, combined with the drive to expand business abroad, have led to spectacular growth beyond Chinese borders.
In 2025, Chinese outbound activities surged to USD 213.6 billion—a 70% increase over 2024—fuelled by construction contracts (USD 128.4 billion) and investment (USD 85.2 billion) in infrastructure, energy, minerals, and technology. Energy accounted for USD 93.9 billion, with USD 18.3 billion of it in green energy. Africa received the largest share — Chinese activities almost tripled to USD 61.2 billion, compared to 2024. In Southeast Asia, activity grew by 80 percent, to USD 12.7 billion. But Chinese companies recognize that they increasingly need to secure funding from international lenders to continue growing their outbound activities at the current pace.
Since 2017, Chinese banks have reduced annual funding for Chinese energy projects abroad — in Africa, funding dropped by 85% over 10 years. Funding is still available, but through different channels. Annual private investments in African clean energy projects rose from USD 17 billion in 2019 to USD 40 billion in 2024, and MBDs and ECAs continue to provide development funding. However, both commercial banks and MBDs require borrowers to align with international E&S standards—such as the Equator Principles (EP4) and the World Bank Group EHS Guidelines.
The accelerating outbound activity of Chinese renewable OEMs and EPCs coincides with growing commitments by MDBs and commercial banks to finance the deployment of climate-aligned and resilient infrastructure. Many MDBs—such as the Asian Infrastructure Investment Bank (AIIB), Asian Development Bank (ADB), International Finance Corporation (IFC), and European Bank for Reconstruction and Development (EBRD)—have shifted their strategies toward climate-resilient, low-carbon infrastructure and mobilising private capital at scale.
Planned capital allocation of MBDs reflects this shift. AIIB has stated that at least 50% of annual approvals through 2030 will be for climate finance, already reaching a 67% share in 2024. Similarly, ADB aims for a 50% share of climate finance by 2030 as part of its USD 100 billion climate commitment. Mission 300, an energy-focused funding initiative led by the African Development Bank Group and the World Bank Group, has raised USD 50 billion in development finance so far.
Commercial banks exhibit the same dynamic, but through a different lens, viewing the energy transition in emerging markets as one of the most significant lending opportunities in decades. However—whether MDB-anchored, MDB de-risked, or fully commercially financed—the viability of climate-aligned pipelines in emerging markets depends on the ability to procure, build, and operate gigawatt-scale renewables cheaply, quickly, and reliably.
Particularly across Africa, Central Asia, and Southeast Asia, this means lenders will need to collaborate with the Chinese industrial ecosystem to deliver projects at the required cost, speed, and scale. MDBs, ECAs, and commercial lenders are aware that—across emerging markets—Chinese OEMs and EPCs are often the only entities capable of executing the utility-scale, climate-aligned projects they strive for at a cost that keeps them bankable.
In large parts of the renewable energy ecosystem, Chinese companies determine the pace, scale, and cost of green infrastructure.
Solar PV: China controls more than 80% of global manufacturing across wafers, cells, and modules—a level of industrial concentration that has driven module prices down from roughly $0.70–0.80/W in 2014 to ~$0.096/W in 2024–2025. This ten-year decline of nearly 85% has transformed the economics of utility-scale solar, enabling tariff-affordable, bankable PV projects across MDB client countries.
Battery Energy Storage Systems (BESS): Global BESS installations exceeded ~200 GWh in 2024 and ~250 GWh in 2025. China delivered ~67% of global deployments in both years, reflecting dominance across upstream materials, LFP chemistry, system integration, and grid-scale delivery. This scale reduces storage costs and is indispensable for integrating high-penetration renewables.
Wind: China installed roughly two-thirds of all new global wind capacity in 2024 and again in 2025, driven by an unprecedented domestic buildout approaching 100 GW annually. While Chinese wind OEMs command a smaller international share than in PV or BESS, their cost advantage positions them for rapid growth abroad.
EPC Execution: In 2025, Chinese EPCs delivered USD 128.4 billion in construction contracts across BRI economies—their highest ever—with more than 80% of overseas EPC turnover concentrated in BRI markets. Africa and Central Asia together accounted for over half of this activity. In practical terms, for high-risk markets where MDBs operate, no other contractor cohort can mobilize at a similar scale, cost, or speed.
As demand for capital grows, Chinese EPCs, OEMs, and sponsors realize that they are not only competing on cost but must also meet a converging set of international sustainability standards to access competitive multi- source financing — i.e., commercial banks, ECAs, and MDBs. With incentives converging on both sides, proactive E&S management and engagement are now a crucial mechanism for enabling faster execution, broader financing options, and reduced project risk.
This means navigating E&S standards that may also differ by lender category. For private-sector investments, the IFC Performance Standards, the World Bank Group EHS Guidelines, and the Equator Principles (EP4) have long been the primary sustainability benchmarks. EP4 updates in 2020 strengthened requirements on climate risk, human rights, stakeholder engagement, and biodiversity.
The latest environmental and social frameworks (ESFs) issued by EBRD—in 2024—and ADB—in 2025)—mirrored or exceeded the EP4 updates. AIIB’s latest revisions to its ESF emphasize disclosures and climate risk. Most ECAs apply the OECD Common Approaches—last updated in 2024—which require human rights due diligence across projects and supply chains.
Consequently, Chinese firms increasingly need to operate within an evolving international E&S architecture. Those doing so successfully not only remain cost-competitive — they become preferred delivery partners for MDBs and commercial banks seeking to deploy climate-aligned capital at scale. At the same time, MBDs and banks should realize they need to partner with Chinese companies to help them navigate international E&S requirements. Proactively ensuring strong E&S alignment is essential to avoid project failure later, as in the example below.
The Myitsone Dam—a high-profile Chinese overseas hydropower project—demonstrates that rising E&S expectations are not merely “paper tigers”. The Myitsone Dam in Myanmar is perhaps the most prominent example of how misalignment on environmental and social performance can derail even the most commercially competitive renewable energy projects.
In 2011, the project was halted due to nationwide public opposition, concerns about displacement and environmental impacts, cultural sensitivities linked to the Irrawaddy River, and a failure to secure social licence or meaningfully engage ethnic minorities. These issues escalated into conflict, reputational damage, and long-term political backlash.
Myitsone shows that technically sound, cost-competitive projects can become non-bankable if local legitimacy, stakeholder engagement, and robust E&S systems are not embedded from the outset. For lenders, it is a reminder that strong E&S alignment is an early-warning indicator of long-term project stability—and for Chinese delivery partners, it is a signal that international-grade E&S governance, and accompanying project-level safeguards are critical to project success, not an optional add-on.
Ultimately, the Myitsone project became not just an E&S failure but a bankability failure—one that should have been prevented if international E&S frameworks had been properly applied.
In our experience, MBDs, ECAs, and commercial banks need to answer four questions to determine the bankability of a renewable energy or infrastructure project.
1. Is the project to be financed aligned with the lender's strategy?
Projects that align with lenders' strategies related to the energy transition, industrial development, or the mobilization of private capital will move faster through internal credit and E&S committees. Lenders are—rightly—prepared to provide more flexibility and better pricing for projects that align with strategic priorities than those that don’t. See also the example in Box 3.
2. Does the design and build integrate the highest E&S standards from day one?
Early alignment of the project design with applicable lender standards is crucial to avoid unpleasant surprises. Retrofitting during construction or operational stages will very likely cause delays and cost escalations. Similarly, underestimated and unaddressed community resistance can slow down or even completely derail projects.
3. Has a lender-grade environmental and social management system (ESMS) to govern contractors been implemented?
In our work advising lenders, we see EPC non-compliance with international E&S standards as the biggest risk to on-time delivery of capital projects. Lenders should insist that appropriate oversight, resourcing, governance, and supply chain screening are embedded and auditable.
4. Have the requirements of participating ECAs been addressed early?
Given the stringent due diligence requirements under the OECD Common Approaches—which ECAs typically follow—sponsors and other lenders should prioritize early E&S screening of issues that most frequently trigger extended ECA review, including meeting requirements on:
Front-loading the identification and management of these risks strengthens project design and can significantly accelerate the processing of guarantee and insurance committees. When all four points are satisfactorily addressed, and Chinese EPCs, OEMs, and sponsors are committed to recognized E&S frameworks, the market will likely respond quickly, as the example in Box 3 demonstrates.
Borrower: China Energy Overseas Investment (Hong Kong) Co., Ltd— the overseas investment platform of China Energy Engineering Corporation (CEEC);
Country: Uzbekistan | Sector: Energy/BESS
Facility & Structure: Corporate green loan. USD 150 million A-loan and up to USD 150 million B-loan to be mobilized by AIIB on a best-efforts basis.
Overview: Financing for utility-scale BESS subprojects was selected against eligibility criteria under a Green Financing Framework (GFF), which are aligned with international and AIIB requirements. Project goal: to enhance grid stability and reliability to support Uzbekistan’s renewable energy transition by scaling BESS capacity via CEEC’s overseas platform.
Outcome: The loan moved from project concept to loan approval in 8 months because the Uzbekistan BESS project squarely aligned with AIIB’s thematic priorities of Green Infrastructure, Technology-enabled infrastructure, and Private Capital Mobilization. The green loan will finance a portfolio of utility-scale battery energy storage assets that enhance grid reliability and enable higher renewable penetration (green + tech), while its A/B loan structure is designed to mobilize private capital alongside AIIB’s own resources. The programmatic, portfolio-based deployment also supports AIIB’s goal to achieve impact at scale through repeatable models and standardized frameworks.
As China’s outbound industrial push continues to align with the climate and development ambitions of MDBs and commercial banks, the question is not whether lenders should work with Chinese OEMs and EPCs, but how to do so responsibly and at scale. The pathway is clear—early alignment to lender standards, credible ESMS implementation, and proactive identification of E&S risks will accelerate project timelines and broaden financing options.
When these elements are in place, projects will move faster, run smoother, and be more attractive to diversified capital. Far from being about compliance, getting E&S management right is a crucial engine for the rollout of affordable, climate-aligned infrastructure across emerging markets.
Discover how integrated technical and sustainability due diligence helps infrastructure investors manage volatility, strengthen resilience, protect margins, and unlock lasting portfolio value.
Exploring the next phase of sustainable investing, where environmental, social and governance risks are increasingly priced into valuation, underwriting and investment decisions.
