Unlocking renewable energy future in emerging markets
The impact of unlocking renewable energy finance.
Our climate future largely depends on whether Emerging Markets and Developing Economies (EMDEs) can successfully transition to cleaner energy systems. For these countries, accelerating the deployment of renewable energy can be a significant opportunity to bolster their energy security, reduce reliance on fossil fuel, and meet their net-zero targets. This is in stark contrast to the fact that only one-fifth of global clean energy investments is taking place in most EMDEs.
Since 2021, the World Economic Forum’s Mobilizing Investment for Clean Energy in Emerging Economies initiative has engaged hundreds of public and private sector stakeholders through in-depth studies of five countries (Brazil, India, Indonesia, Nigeria and Malaysia) to identify the highest risks and greatest challenges to clean energy investments. Working groups have since provided country-specific regulatory and policy recommendations, as well as non-policy solutions to scale clean energy finance.
At the World Economic Forum Annual Meeting 2024, the initiative launched the Network to Mobilize Clean Energy Investment for the Global South to amplify the investment needs of developing nations and advance actionable solutions to increase clean energy capital flows across those markets. Comprising 20+ CEOs and ministers – including from Colombia, Egypt, India, Japan, Malaysia, Morocco, Namibia, Nigeria, Norway, Kenya, and South Africa – the network will provide a space for emerging economies to exchange best practices and lessons learned.
The network will also foster collaboration around value chain strategies, regulatory policies, and investment mechanisms; breaking down barriers and unlocking practical solutions to accelerate a just, equitable and sustainable energy transition in the Global South.
What's the challenge with clean energy projects?
Current levels of investment in cleaner energy systems in EMDEs remain largely insufficient. By early 2030s, investment needs to triple (from $770 billion to $2.2-8 trillion) to meet the Global South’s growing energy demands in a just, equitable and sustainable way, and stay in line with the Paris Agreement.
While global renewable energy investment is abundant, only one fifth is being allocated to EMDEs (excluding China), leaving the world at risk of falling short of climate and development targets – failing to propel a fair global energy transition.
Attracting finance to EMDEs hinges on addressing cross-cutting factors that hinder investment. Increased levels of risks – whether real or perceived – and uncertainties in policy and regulatory frameworks can deter investors from working with developing countries, where the cost of capital is up to seven times higher than that of developed nations. Yet, avoiding a tonne of CO₂ emissions in EMDEs costs about half as much as it does in advanced economies, further reinforcing the urgency to shift the world’s attention and capital to the Global South.
Our approach to unlocking renewable energy finance.
Within the Mobilizing Investment for Clean Energy in Emerging Economies Initiative, the Forum has been working to provide guidance for an equitable and inclusive energy transition and develop practical solutions to accelerate the financing of the energy transition in EMDEs.
In Malaysia, a working group of more than 50 public-private stakeholders developed four key solutions being implemented on the ground to facilitate clean energy finance. These include Malaysia’s first large-scale Renewable Energy Zone and the first national Carbon Capture Utilization and Storage Hub.
Forum partners in Nigeria proposed solutions to fund clean energy projects using the local currency. This enables the growth of community-based developers, while enhancing the issuance of corporate infrastructure debt instruments. The concept for a technical assistance accelerator programme for solar entrepreneurs was also developed to improve investment profiles robustness.
In Indonesia, an accelerator programme raised the profile of six clean energy projects aligned with national clean energy priorities. These include a new solar and battery initiative bringing 15MW of clean energy to the East Sumba region – enough to power approximately 4,000 homes and avoid 5.5KtCO₂ yearly emissions. The work also uncovered six policy and regulatory aspects that, if addressed, would help unlock Indonesia’s clean energy future.
A new technology de-risking fund for energy storage is being explored in India. This project will give multilateral institutions, businesses and financial institutions access to extend loans to riskier storage projects, a solution that is especially relevant in Tamil Nadu or Karnataka where renewable energy generation is exceptionally high.
In Brazil, 98% of the population has access to electricity but a large portion of the country in the north and northeast is not connected to the grid. Communities in these regions either have no access to electricity or use fossil-based electricity including diesel-powered generators. Stakeholders are exploring the creation of an accelerator platform to finance hybrid updates to isolated energy systems that are not yet connected to the grid.
Colombia and South Africa have also launched multistakeholder working groups to identify pathways for mobilizing clean energy finance and investment in their respective energy transitions.
Cover photo: Sunset above a renewable energy power plant
Image: Getty Images/iStockphoto
