What Is the Clean Energy Market and How Can Investors in Emerging Economies Participate?
Billions of people in developing countries lack access to electricity and clean cooking fuel. But more consumption of conventional energy such as fossil fuels and nuclear power could escalate prices and emissions of pollutants that jeopardize human health and the environment.
To help emerging economies take advantage of clean energy opportunities, Abt Associates — in partnership with advisory firm Enclude and under USAID’s Analysis and Investment for Low-Emission Growth (AILEG) project — has developed the Clean Energy Lending Toolkit. In six modules, this customizable toolkit guides bankers and others in developing countries through the current clean energy market financing landscape, helping them understand how their customers could take advantage of opportunities with the right lending systems and products.
“Clean energy is defined as any energy source that meets the needs of the present without compromising the ability of future generations to meet their needs or harm the environment,” said Marcia Trump, AILEG and toolkit project director. “It includes renewable energy — such as solar, wind, biogas, biomass, and hydropower — and energy efficiency measures that conserve power, such as efficient lighting, insulation, solar heating and panels, and efficient plant operations.”
“The significant capital needed to finance clean energy and spur growth must come from private investors, in addition to public sectors and donors,” Trump said.
USAID’s Power Africa initiative estimates that sub-Saharan Africa needs $300 billion to bring universal access to electricity to the region. Globally, the need for clean energy investments is much larger.
Clean energy lending customers run the gamut from rural households without electricity to enterprises of all sizes — in agribusiness, mining, infrastructure, construction and services — seeking lower monthly energy bills.
Despite strong worldwide demand for clean energy, many lenders in emerging economies have not developed appropriate loans and other products to adequately take advantage of the high-potential clean energy market.
Abt’s toolkit is adaptable to multiple lending markets and geographies. It walks bankers and other lenders — including microfinance, credit unions and venture funds — through the clean energy financing process, from assessing and entering the clean energy market to preparing potential loan products and windows.
Download the Clean Energy Toolkit.
Read more about Abt’s work in low-emission growth strategies.