Renewable energy (RE) generation (e.g., from solar, wind, hydro, and geothermal sources) is a critical sector for climate change mitigation and the global transition to net-zero emissions. However, the introduction of RE technologies to new markets with well-established conventional thermal technologies includes substantial first-mover and teething costs for upfront construction outlays (proxy costs for the United States, which has a growing RE market, are: US$1,655 per megawatt (MW) for solar facilities; US$1,498/MW for wind; US$1,116/MW for natural gas plants; and US$795/MW for oil-fired); infrastructure for RE integration; and technological and knowhow imports, among others. Such costs can be prohibitive for the development of new assets, particularly in developing countries with nascent or historically limited investment flows in RE. To bridge this gap, multiple climate funds invest in RE projects in emerging economies, aiming to increase uptake, and spur scaling and replication effects that can make RE cost-competitive against traditional thermal sources.
This Results Deep Dive focuses on results achieved by the Climate Investment Funds’ (CIF) Clean Technology Fund (CTF) and examines the average investment value (in USD) per MW of installed capacity, differentiated by technology type. The CTF provides resources to support large and utility scale investments in clean technology projects in low- and middle-income countries displays. The resources contribute to financing the demonstration, deployment, and transfer of low-carbon technologies with significant potential for reducing long-term greenhouse gas (GHG) emissions. For projects, CTF’s concessional financing facilitates demonstration of the viability of the underlying technologies and bears most of the contextual risks by crowding in investment from other sources. The goal is that, in the long-term, once costs and risks have been reduced, deploying RE technologies in emerging markets will no longer require third-party concessional finance.
This analysis is based on all approved RE and mixed RE-energy efficiency CIF projects with a target for delivering installed capacities. The analysis draws on project reports submitted to CIF by the multilateral development banks (MDBs). Technologies are analyzed by energy source, and are divided into the categories of geothermal, hydro, solar, wind, and other.