Abstract

Artificial Intelligence (AI) is transforming energy financing by enhancing decision-making, optimizing investment portfolios, and improving risk assessment in sustainable infrastructure projects. This review explores the role of AI in energy financing, focusing on its applications in risk evaluation, credit scoring, investment optimization, and the development of climate-aligned financial strategies. AI-driven predictive analytics enable investors to assess the financial viability of renewable energy projects, identify high-impact opportunities, and optimize asset allocation. Additionally, AI-powered models enhance credit scoring for energy developers, facilitating access to funding for clean energy initiatives. The integration of AI with blockchain and smart contracts is also revolutionizing energy financing by ensuring transparency, reducing fraud, and automating financial transactions in sustainable projects. Furthermore, AI plays a crucial role in the management and monitoring of green bonds, improving impact assessment and ensuring accountability in climate finance. However, several challenges hinder AI-driven energy financing, including data limitations, regulatory gaps, cybersecurity risks, and potential biases in AI decision-making models. Ensuring data quality, developing ethical AI frameworks, and addressing cybersecurity concerns are essential for AI’s successful adoption in energy investment strategies. Future opportunities lie in AI-driven predictive analytics for emerging markets, enabling better financing mechanisms for off-grid and decentralized energy solutions. AI can also enhance public-private partnerships by optimizing investment structures and improving government funding allocation for renewable energy projects. As AI continues to evolve, it holds the potential to reshape energy financing, drive sustainable investments, and accelerate the transition to a low-carbon economy. This review underscores the need for collaborative efforts among policymakers, financial institutions, and technology providers to maximize AI’s potential in sustainable energy infrastructure financing while addressing its inherent challenges.