Through in-depth research, Sustainable Energy for All (SE4ALL) and partners are tracking which parts of the global community are making strides, and which are lagging behind, in terms of mobilisation of funds to enable this goal.
The collaboration has released the first-of-its-kind research, analysing finance flows for electricity and clean cooking access in 20 countries across Africa and Asia with significant access gaps, and how finance strategies could be scaled and refined to reach more people, more affordably, with sustainable energy.
The new Energizing Finance series reveals the current flow of finance for energy access and clean cooking will not achieve global goals for delivering universal access by 2030.
Finance flows for universal energy access
Estimates show an annual investment of $45 billion is needed to meet universal electrification, but the latest data shows that finance commitments for electricity in these 20 ‘high-impact’ countries that represent 80% of those without electricity access is less than half that number, averaging just $19.4 billion a year.
The largest bilateral financier across high-impact countries was China, which was where 21% of finance originated from.
Finance tracked for clean cooking revealed a much greater challenge. Across the 20 countries with the largest clean cooking access gaps representing 84% of the global population without access, annual finance committed averaged just $32 million, compared to the estimated annual investment need of at least $4.4 billion.
Speaking on the announcement, Rachel Kyte, CEO and special representative of the UN Secretary-General for SEforALL, said: “Overall investments are substantially lower than what’s needed to achieve our energy access goals.
“While it’s good to see encouraging, early-stage progress in a handful of countries on electricity access, we urgently need targeted, refined strategies to increase investment in integrated electricity solutions.”
Kyte added: “The lack of financing for clean cooking solutions is shocking. Fixing financial flows to ensure everyone has access to clean, affordable reliable energy is essential in meeting our commitment to leave no one behind.”
The analysis delivers a strong wake-up call to the levels of finance flowing to close energy access gaps, but also creates a roadmap of opportunities, which if finance is more strategically directed, will allow the nations to meet the UN Sustainable Development Goal 7, and provide affordable, reliable, sustainable and modern energy for all by 2030.
Need for transformative partnerships
The African Development Bank (AfDB) Vice-President, Power, Energy, Climate and Green Growth, Amadou Hott, who authored the report looking at gaps and lags in disbursements, said: “These reports are an important wake-up call that the world is not on track to achieve electricity for all.
“As part of its New Deal on Energy for Africa, the AfDB has set the ambitious goal of achieving universal access to electricity in Africa by 2025. This will not be done by AfDB alone.
“To achieve this, we need transformative partnerships between the public and private sector to improve energy access planning and increase investment in the preparation and implementation of energy access projects, including innovative access solutions such as off-grid.”
Climate Policy Initiative (CPI) and the World Bank Group tracked finance for electricity and clean cooking access in high-impact countries.
Dr. Barbara Buchner, executivedirector, Climate Policy Initiative, said: “This is the first time anyone has worked to assess how much finance is flowing to energy access, and the results surprised us.
“While we are clearly nowhere near what’s needed to meet universal energy access goals, a much clearer picture of what’s happening both globally and on the ground, will help nations, investors, and communities to better scale up the next wave of energy investment.”
Country level analysis was conducted in Bangladesh, Ethiopia and Kenya of the financing landscape at the national level.
Enterprise surveys were also conducted in these countries plus Myanmar and Nigeria to understand the challenges and opportunities facing businesses providing decentralised energy solutions.
Bangladesh and Kenya showed gains in urban and rural areas with integrated strategies that include centralised electric grid infrastructure as well as mini-grid and off-grid energy systems such as solar home systems which are already powering millions of rural households, helped by supportive policies that spur diverse types of public and private finance for energy access projects and companies.
Practical Action Consulting, along with E3 Analytics, undertook the deep-dive country level analysis. Paul Smith Lomas, CEO, Practical Action: “We have long argued that financial systems are skewed; the amount of finance directed towards decentralised energy technologies, like mini-grids and stand-alone systems, remains tiny in comparison to investments in national grids.
“This is despite decentralised energy technologies being the most economical solution to meet the needs of the majority of unconnected people by 2030.
“To make these technologies more available to communities, and to achieve universal access, national policies must also better understand and support local businesses, banking and markets”
The series of reports also looked at the amount and type of international and domestic finance flowing to these countries for energy access; specific kinds of projects being financed, whether large-scale grid projects or more-affordable decentralised energy services; how quickly development finance is being disbursed; and the financing needs and challenges of energy enterprises providing decentralised electricity and clean cooking services in five high-impact countries.
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