How do we turn small-scale, distributed energy into a multitrillion-dollar sector?

As clean energy deployment grows, small-scale and community infrastructure projects remain stuck in fragmented and complex financing processes that require unwieldy overhead to secure proper funding. Standardizing the systems behind project finance could transform this critical segment of the clean energy market, creating the efficiency needed to mobilize capital at scale, drive investment to underserved communities, and dramatically accelerate distributed energy projects.

In a recent virtual event, Latitude Media’s Stephen Lacey hosted a conversation with Amanda Li, COO of Banyan Infrastructure, and Rachel Halfaker, director at the Milken Institute. The three clean energy and finance experts delved into the challenges inhibiting the project finance industry and how they are approaching solutions that will help the industry reach its full potential. 

Below are the most salient points that emerged from the public discussion. Or, you can watch the full webinar here. 

“Distributed energy financing has been defined as death by a thousand cuts.”

This prompt was the first conversation starter offered by Lacey, giving the two industry experts a chance to rebuke the comparison made by many financiers. What makes these small-scale projects different from large-scale utility energy projects?

Li offered that the reason small-scale financing, like renewable energy project finance, has been likened to a death by a thousand cuts is because “the frameworks we are using for these smaller projects are borrowed from the larger projects.” However, for small-scale renewable energy project finance, this borrowed playbook creates crushing overhead when repeated multiple times for each small project instance, leading to increasingly smaller returns. 

“Amanda [Li] sketched out how, on the underwriting, it can be hard to justify the same amount of diligence, the same amount of overhead, to get a half-million-dollar deal as it might cost to get a $25-million deal,” Halfaker agreed. However, she added that another difficulty in this asset class is that it’s not a single entity creating this deal, but rather hundreds whose small projects stack up and exacerbate any process issues that may not be as burdensome when occurring on a large-scale project. 

On the funding side, much of the secondary market financing is handled at community banks, where the teams behind the funding are significantly smaller than those at larger commcercial banks, which typically fund larger projects. This means that fewer people are tasked with doing all the work themselves for each project. The process becomes tedious and unscalable for the small institutions that hold the key to community renewable energy projects. 

“The capital is here. There’s an organizational barrier.”

Halfaker turned the conversation to focus on the importance of collaboration in scaling project finance, noting her work at Milken on a program called “The Dealroom”. There, she would play matchmaker by manually introducing developers and financiers to fund projects with blended capital solutions. It was clear through this exercise that capital for building clean energy projects is available, but a lack of connection and collaboration is needed to get it to the developers. 

Li agreed, noting that the Greenhouse Gas Reduction Fund (GGRF), established by the Inflation Reduction Act in 2022, has led to a surge in project finance market participants. At the time, there was an incentive for financiers and developers to keep project and financing information close to their chests to compete in a market flooded with public funds. However, with GGRF funding no longer driving the industry in 2025, people are asking, "How can we continue the work now that I’ve identified this need in my community?" 

Li and Halfaker agreed that there is a new incentive to collaborate instead of keeping secrets to maintain momentum in renewable energy project finance. Standardizing the language the industry uses to discuss projects, financing terms, and return on investment is the first step to facilitating collaboration. Once everyone is speaking the same language, more progress can be made more quickly to deploy funds and bypass the current organizational barriers. 

“It’s more than just a data platform.”

Halfaker gave a nod to Banyan Infrastructure’s project finance software ecosystem, noting that it is much more than just a platform for data storage. She explained that, “Amanda has demonstrated that when we share data, we can move deals. 

“We don’t want to cause any more fragmentation… I think it was really natural for us to think about building platform integration and demonstrate to the market how we can be interoperable.” 

The Milken Institute and Banyan Infrastructure are working on an integration that is meant to spur more ‘matchmaking’ by surfacing the right projects to the right capital providers and informing project developers what capital providers are looking for precisely. 

Both Li and Halfaker agreed that this is just one of many collaborative partnerships to come, aimed at reshaping the currently tedious process of shopping a project around to secure funding. This effort is about making the world of project finance more transparent, standardized, and accessible, and ultimately removing the burdensome overhead. 

“How is this moment different?”

Clean energy project developers have struggled with bespoke financing approaches for decades, but how is this moment different? Lacey asked this question with curiosity after hearing the others’ points on standardization. He wanted to know, haven’t project financiers attempted to standardize before?

According to Halfaker and Li, people have attempted to standardize project finance before, but the blended nature of capital stacks makes it more complicated to assess than of the other asset classes. There’s an old belief that standardization is impossible because project finance is always bespoke.

But, they said, that is simply untrue. In fact, there is a model from other financial products that project finance professionals can mimic and adapt. Early on in the renewable energy project industry, the sector was young, and each institution was financing projects using its own approach, methodology, and terminology. Now, with public funding catalyzing private investment, digital technologies enabling collaboration, and renewables poised for scale, standardization may finally be ready. 

She urged listeners to have faith that “we can create a common language to make these deals easier,” and that opening the door to standard data sharing, cross-industry connections, and dealmaking through standardization is what will drive project finance growth. 

Ready to learn more about how standardization and digital transformation can benefit your project finance portfolio? Reach out to Banyan Infrastructure today to learn more.