- Climate adaptation and the energy transition in the Maldives require billions in investment, with sea defences alone costing USD 2–4 billion and emissions cuts needing over USD 800 million annually.
- Renewable energy and tourism offer opportunities to cut electricity costs and boost resilience, but remote geography, limited bank expertise and scarce collateral hinder access to green finance.
- Nearly 59 percent of Maldivians live outside Greater Malé facing a wide SME financing gap, while blended finance and guarantees could help reduce investment risk.
For the Maldives, the cost of climate change is not measured only in rising seas or environmental damage. It is also reflected in the cost of electricity, the security of livelihoods and the future of businesses across our islands. Addressing these challenges will require substantial investment, but getting that money to the projects and communities that need it most is not simple.
The scale is significant. The World Bank projects sea levels around the country could rise by 0.5 to 0.9 metres by 2100, with protection against rising seas and flooding estimated to cost USD 2–4 billion.
Energy adds to the pressure. The Maldives imported USD 710 million worth of petroleum products in 2025, according to Customs data published by the Maldives Monetary Authority (MMA). In December 2025, MMA Governor Ahmed Munawar said cutting emissions would require more than USD 800 million annually, adding that public funds alone would not be enough, Maldives Business Review reported. Banks, investors and development partners will therefore have an important role in financing the transition.
The opportunities and the barriers
Replacing diesel generators with solar panels and battery storage can reduce electricity costs and exposure to international oil price fluctuations. The national target, cited by the Governor, is for renewable sources to account for 33 percent of electricity generation by 2028.
Tourism also offers opportunities. It contributes more than 28 percent of the economy directly, according to a September 2025 report by the EU-funded PROMISE project. Resorts and guesthouses could benefit from financing for solar power, energy-efficient cooling and cleaner water systems. For a guesthouse owner, such investment could mean lower electricity bills and greater financial resilience.
But accessing finance is not always straightforward. The Maldives’ geography makes projects more expensive to deliver, particularly in remote islands where transporting equipment and workers adds to costs. The PROMISE report also highlights that banks may lack the technical expertise to assess smaller green projects, while small businesses often have limited property to offer as collateral.
These barriers fall hardest outside Greater Male’. Nearly 59 percent of Maldivians live outside Greater Malé, served by 58 bank branches across 20 atolls, according to the MMA’s National Financial Inclusion Strategy. The World Bank estimated that small and medium-sized businesses faced a financing gap of approximately MVR 11.1 billion in 2022, as cited by the MMA. Expanding access to finance is essential if green investment is to reach smaller businesses across the country.
Making investment less risky
Banks and investors weigh potential returns against the risk of losing money. Blended finance can help by combining commercial investment with development-partner support, such as guarantees or lower-cost financing. A guarantee covers specified risks that might otherwise discourage lenders, helping private capital enter markets where financing would be difficult to secure.
The Maldives has already seen how this can work. Under the World Bank’s ASPIRE programme, private companies were invited to develop solar power systems, initially in Greater Malé. The World Bank provided USD 16 million in guarantees against the risk of power purchase agreements being cancelled. A dedicated account helped ensure timely payments, while contracts were denominated in US dollars.
Competition increased across procurement rounds, and the price of solar electricity fell by 53 percent, from USD 0.21 to USD 0.0988 per unit, according to the Climate Investment Funds. More than 17.5 MW of private solar capacity is operational or under development. The experience shows how sharing risk can attract investment and make renewable energy more affordable.
Building confidence through clear rules
Investors also need confidence that projects receiving green financing genuinely deliver environmental benefits. Clear standards help prevent greenwashing, where businesses make environmental claims without meaningful action, and protect the credibility of sustainable finance.
Building investor confidence also requires progress at the regulatory level. The Maldives is working towards clearer standards for identifying and reporting green investments. The MMA has engaged MTI Consulting to develop a national green finance taxonomy, which will define activities eligible for green financing, FT.lk reported in 2024. The MMA’s National Sustainable Finance Roadmap, launched in December 2025, commits to developing this taxonomy and strengthening the framework for green lending. The Capital Market Development Authority (CMDA) is also advancing sustainability-related work, building on its 2024 reporting framework for listed companies.
Progress will require cooperation: development partners sharing risks, regulators establishing clear standards, banks building the capacity to assess smaller projects, and businesses bringing forward viable proposals.
Where the conversation happens
These are among the questions at the centre of the Maldives Finance Forum 2026, taking place today, 14 November, at dusitD2 Feydhoo. The Maldives Pension Office is organising the Forum in collaboration with UNDP Maldives under the theme ‘Green Finance: Unlocking Sustainable Investment and Financial Security in the Maldives’.
The 13th edition brings together regulators, banks, investors, development partners and international experts to examine how risks can be shared, rules strengthened and access to green finance expanded. Ultimately, success will be measured by the difference green investment makes to our islands, businesses and future generations.
