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Mobilising capital for the
clean energy transition
OECD-IEA Climate Change Expert Group, 4 April 2024
Siddharth Singh, Energy Investment Analyst, IEA
IEA 2024. CC BY 4.0. Page 2
Clean energy investment is widening the gap over fossil fuels
Global energy investment in clean energy and in fossil fuels
For every dollar invested in fossil fuels, about 1.8 dollars are now going into clean energy.
Five years ago, this ratio was one-to-one
400
800
1 200
1 600
2 000
2015 2016 2017 2018 2019 2020 2021 2022 2023e
Billion USD
(2022)
Clean energy
Fossil fuels
IEA 2024. CC BY 4.0. Page 3
Clean energy investment in EMDEs has yet to take off
Excluding China, emerging market and developing economies make up over one third of global GDP and about two-
thirds of global population but only 14% of clean energy investment
Clean energy investment, 2018-2023; GDP and population by region, 2022
Emerging and
developing economies
Other emerging and
developing economies
500
1 000
1 500
2 000
Billion
USD
(2022)
2015 2016 2017 2018 2019 2020 2021 2022 2023
Advanced economies
China
IEA 2024. CC BY 4.0. Page 4
A steep pathway to SDGs and climate goals
Clean energy investment in emerging and developing countries (excluding China)
A six-fold surge in spending on clean power, grids, storage and efficient technologies is
needed over the next decade to align with the Net Zero Emissions by 2050 Scenario
0.6
1.2
1.8
2023e 2026-30 2031-35 2031-35
Announced Pledges Scenario
Trillion USD
(2022, MER)
2023e 2026-30 2031-35 2031-35
Net Zero Emissions by 2050 Scenario
Middle
East and
Eurasia
Latin
America
Africa
India and
other Asia
SE Asia
3x 6x
Clean power Low-emission fuels
Energy efficiency and
End-use
Grids and storage
IEA 2024. CC BY 4.0. Page 5
Emerging & developing economies face an elevated cost of capital
The cost of capital for solar PV and storage projects in emerging and developing economies can be more than double
the value in advanced economies, making it much more challenging to get projects off the ground
Cost of capital for utility-scale solar PV and storage projects taking final investment decision in 2022
3%
6%
9%
12%
15%
Emerging & developing
economies
Advanced economies
Solar PV
Storage
Solar PV
Storage
IEA 2024. CC BY 4.0. Page 6
Bringing down financing costs is key to affordable transitions
Financing costs can be the largest single element in total EMDE clean energy project costs; Lowering the cost of
capital by 1 percentage point could reduce financing costs for EMDE net zero transitions by USD 150 billion per year
Composition of the levelised cost of electricity from a solar PV plant taking FID in 2022 in different economies
20%
40%
60%
80%
100%
Europe United
States
Brazil Indonesia Mexico South
Africa
India
Advanced economies Emerging and developing economies
Operation &
maintenance costs
Fixed costs
(e.g. land, modules,
installation)
Financing cost
IEA 2024. CC BY 4.0. Page 7
Immediate actions and long-term solutions
Beyond measures to address project and macro risks, a common denominator is the need for enhanced international
technical & financial support, and coordinated provision of financing & risk mitigation tools
Illustrative risks that push up the cost of capital and de-risking solutions for a solar PV project
Country &
macro
risks
Sector &
project risks
Macroeconomic
& currency risk
Stability & rule of
law
Payment risk
Regulatory risk
Delayed access to
land and grids
Risks
Assured land & grid
connections
Hedging
instruments
Political risk
insurance
Guarantees against
payment delays
Residual risk
Short-term
interventions
Utilities on firmer
financial footing
Stronger institutions
& economic
management
Residual risk
Regular, transparent
procurement /
auctions
Longer-term,
structural solutions
Network & storage
planning
Base rate Base rate Base rate
IEA 2024. CC BY 4.0. Page 8
Five pillars to keep 1.5 °C alive
A comprehensive energy package for COP28 needs to drive the growth in clean energy,
support emerging and developing economies in the transition, and recognise the need to reduce fossil fuel demand
Installed
renewables (GW)
2 400
4 800
7 200
9 600
12 000
1%
2%
3%
4%
5%
Energy intensity
improvement
0.5
1.0
1.5
2.0
2.5
Clean energy investment
in EMDE* (Tn USD)
25
50
75
100
125
Fossil fuel
methane (Mt)
100
200
300
400
500
Fossil fuel
demand (EJ)
3x
2x
3x
-75%
2022 2030 2022 2030 2022 2030
2022 2030
2022 2030
-25%
* EMDE = emerging market and developing economies
IEA 2024. CC BY 4.0. Page 9

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CCXG global forum, April 2024, Siddharth Singh

  • 1. Page 1 Mobilising capital for the clean energy transition OECD-IEA Climate Change Expert Group, 4 April 2024 Siddharth Singh, Energy Investment Analyst, IEA
  • 2. IEA 2024. CC BY 4.0. Page 2 Clean energy investment is widening the gap over fossil fuels Global energy investment in clean energy and in fossil fuels For every dollar invested in fossil fuels, about 1.8 dollars are now going into clean energy. Five years ago, this ratio was one-to-one 400 800 1 200 1 600 2 000 2015 2016 2017 2018 2019 2020 2021 2022 2023e Billion USD (2022) Clean energy Fossil fuels
  • 3. IEA 2024. CC BY 4.0. Page 3 Clean energy investment in EMDEs has yet to take off Excluding China, emerging market and developing economies make up over one third of global GDP and about two- thirds of global population but only 14% of clean energy investment Clean energy investment, 2018-2023; GDP and population by region, 2022 Emerging and developing economies Other emerging and developing economies 500 1 000 1 500 2 000 Billion USD (2022) 2015 2016 2017 2018 2019 2020 2021 2022 2023 Advanced economies China
  • 4. IEA 2024. CC BY 4.0. Page 4 A steep pathway to SDGs and climate goals Clean energy investment in emerging and developing countries (excluding China) A six-fold surge in spending on clean power, grids, storage and efficient technologies is needed over the next decade to align with the Net Zero Emissions by 2050 Scenario 0.6 1.2 1.8 2023e 2026-30 2031-35 2031-35 Announced Pledges Scenario Trillion USD (2022, MER) 2023e 2026-30 2031-35 2031-35 Net Zero Emissions by 2050 Scenario Middle East and Eurasia Latin America Africa India and other Asia SE Asia 3x 6x Clean power Low-emission fuels Energy efficiency and End-use Grids and storage
  • 5. IEA 2024. CC BY 4.0. Page 5 Emerging & developing economies face an elevated cost of capital The cost of capital for solar PV and storage projects in emerging and developing economies can be more than double the value in advanced economies, making it much more challenging to get projects off the ground Cost of capital for utility-scale solar PV and storage projects taking final investment decision in 2022 3% 6% 9% 12% 15% Emerging & developing economies Advanced economies Solar PV Storage Solar PV Storage
  • 6. IEA 2024. CC BY 4.0. Page 6 Bringing down financing costs is key to affordable transitions Financing costs can be the largest single element in total EMDE clean energy project costs; Lowering the cost of capital by 1 percentage point could reduce financing costs for EMDE net zero transitions by USD 150 billion per year Composition of the levelised cost of electricity from a solar PV plant taking FID in 2022 in different economies 20% 40% 60% 80% 100% Europe United States Brazil Indonesia Mexico South Africa India Advanced economies Emerging and developing economies Operation & maintenance costs Fixed costs (e.g. land, modules, installation) Financing cost
  • 7. IEA 2024. CC BY 4.0. Page 7 Immediate actions and long-term solutions Beyond measures to address project and macro risks, a common denominator is the need for enhanced international technical & financial support, and coordinated provision of financing & risk mitigation tools Illustrative risks that push up the cost of capital and de-risking solutions for a solar PV project Country & macro risks Sector & project risks Macroeconomic & currency risk Stability & rule of law Payment risk Regulatory risk Delayed access to land and grids Risks Assured land & grid connections Hedging instruments Political risk insurance Guarantees against payment delays Residual risk Short-term interventions Utilities on firmer financial footing Stronger institutions & economic management Residual risk Regular, transparent procurement / auctions Longer-term, structural solutions Network & storage planning Base rate Base rate Base rate
  • 8. IEA 2024. CC BY 4.0. Page 8 Five pillars to keep 1.5 °C alive A comprehensive energy package for COP28 needs to drive the growth in clean energy, support emerging and developing economies in the transition, and recognise the need to reduce fossil fuel demand Installed renewables (GW) 2 400 4 800 7 200 9 600 12 000 1% 2% 3% 4% 5% Energy intensity improvement 0.5 1.0 1.5 2.0 2.5 Clean energy investment in EMDE* (Tn USD) 25 50 75 100 125 Fossil fuel methane (Mt) 100 200 300 400 500 Fossil fuel demand (EJ) 3x 2x 3x -75% 2022 2030 2022 2030 2022 2030 2022 2030 2022 2030 -25% * EMDE = emerging market and developing economies
  • 9. IEA 2024. CC BY 4.0. Page 9