Article | Last updated: 19/08/2014
The funds provided through official development assistance (ODA) are not sufficient for ensuring universal energy access.
The current level of commercial investment in renewable energy in developing countries is growing, but it still falls short of the total volume needed. Although many of the markets in question are immature, the present and future needs for clean and affordable energy represent a considerable market opportunity. Climate finance instruments represent an untapped potential for investments in renewable energy in developing countries. Private sector enterprises could also profit from public–private business models for investments in renewable energy (RE) and energy efficiency (EE).
One of the main obstacles for commercial investments in renewable energy in developing countries is the fact that the perceived risk of investments is often greater than the investment’s anticipated return. This makes investments unprofitable and hence unlikely. Sufficient incentives are not there to provide private and commercial investments. Many developing countries lack capacity, sector reforms or appropriate legislation to attract investors. In essence, this explains the gap between necessary investments and actual investments in renewable energy in developing countries. In order to encourage investments, the authorities should focus on two highly important issues: Reduce the risks and/or increase the returns required.
Energy+ will work in specific areas to address these two overarching issues of risks and returns. Energy+ promotes strategic use of public funds to leverage private and commercial investments and enables e better country specific environment for investments. This is one of the keys to unlocking developing countries’ green growth potential.
Energy+ engages with the private sector to identify challenges and opportunities for private investors interested in investing in renewable energy. Read more here.