Finance for Renewables in Developing Countries Is on the Rise

Global finance to developing countries in support of clean and renewable energy reached USD 21.3 billion in 2017. This almost doubles the level from 2010 when international financial flows were at USD 10 billion, according to latest figures of a new indicator under the Sustainable Development Goal 7 (SDG). The new indicator, jointly monitored by the International Renewable Energy Agency (IRENA) and the Organisation for Economic Co-operation and Development (OECD), tracks global capital flows to developing countries in pursuit of affordable, reliable, sustainable, and modern energy for all.

By tracing international financial flows to developing countries, the new SDG7 indicator aims to enhance international co-operation and promote investment in energy infrastructure and clean energy technology by 2030. Despite recent fluctuations, the long-term trend for investment keeps increasing and could reach more than USD 20 billion annually in the years to come.

Between 2000 and 2017, total investment to developing countries for clean and renewable energy reached a cumulative sum of USD 138.9 billion. The total flows continued to grow since 2010, from USD 10.0 billion to USD 21.4 billion in 2017. Depending on the timing of large-scale investments in hydropower, these flows can vary considerably from year to year. However, the broad trend shows a fifteen-fold increase over the period of 2000 – 2017, reflecting an increased focus of development aid on clean and renewable energy.

While hydropower has historically received the lion’s share, investments in wind, geothermal and, especially, solar energy have grown significantly in the last few years. Investments in hydropower accounted for about 60% of international investment flows in renewables in the first decade. Flows to other technologies were generally small, with most projects focusing on providing technical assistance or supporting small-scale infrastructure developments.

Since 2009, the share of hydropower has fallen to 45%, while wind, geothermal and, especially, solar energy has gained ground. The scale of projects has also increased over the period, from an average of USD 10 million per project in 2000-2009 to USD 19 million in the last four years (2014-17).

For more, see Renewable Energy Statistics 2020

To learn about new capacity additions being financed through the IRENA/ADFD Project Facility, see Advancing Renewables in Developing Countries