- Investments in renewable energy must rise from $570 billion in 2023 to $1.55 trillion annually by 2030 to meet global climate goals, according to the IFC.
- The IFC’s report highlights a sharp decline in private sector investment in emerging markets power sectors, with only 16% of sustainable financing directed to these regions since 2010.
According to the IFC, investments in renewable energy generation need to increase significantly to meet global climate goals. They will rise from $570 billion in 2023 to an average of $1.55 trillion annually between 2024 and 2030. This highlights the urgent need for greater collaboration between governments, private investors, and international organisations to scale up renewable energy projects worldwide.
The International Finance Corporation (IFC), a member of the World Bank Group, highlighted this challenge in a report titled “Repurposing Power Markets: The Path to Sustainable and Affordable Energy for All.” The report revealed that from 2010 to 2023, the private sector invested an estimated $4.84 trillion in global power markets.
Approximately 80% ($3.87 trillion) of this amount was directed towards advanced economies while emerging markets received only 20% ($966 billion). More troubling, however, is the sharp decline in private financing for emerging markets’ power sectors, which dropped from 36% to just 12% over this period.
The IFC stressed the urgent need to ramp up private investment in emerging market power sectors, which have faced challenges such as unreliable grid supply and frequent blackouts. In countries like Nigeria, businesses often rely on costly and polluting diesel generators as the only backup solution.
The report emphasised that distributed renewable energy solutions, such as solar hybrid systems, can offer cleaner, more reliable, and affordable alternatives. The commercial viability of such systems needs to be proven to attract investment in these emerging markets.
The report also highlighted a milestone in sub-Saharan Africa’s renewable energy sector. IFC’s first distributed energy investment in the region was in Daybreak, Nigeria’s second-largest commercial solar hybrid power provider. The $20 million investment enables Daybreak to expand its solar photovoltaic capacity by four times, reaching 38 megawatts.
While diesel remains a backup solution, Daybreak’s solar hybrid systems minimise its use, improving reliability for commercial and industrial customers. This supports productivity, economic growth, and the development of Nigeria’s off-grid energy sector, catalysing private sector investments in clean, climate-smart energy solutions.
Additionally, green bonds and loans have gained traction in the power sector, with $198 billion issued in 2023, though this declined from $283 billion in 2021. Cumulative issuance from 2010 to 2023 totalled $1.48 trillion. Despite the increasing use of sustainable financing, emerging markets received only 16% of these flows. That share has continued to shrink in recent years, with just 9% of total funding sustainable directed towards emerging markets in 2023.