New study from Bloomberg New Energy Finance suggests cut-rate financing can speed the switch from fossil fuels to green energy in developing countries
Improved access to cheap finance could dramatically accelerate the switch from fossil fuels to renewables in developing countries, according to a new study out this week from Bloomberg New Energy Finance (BloombergNEF).
The research, commissioned by the Clean Technology Fund (CTF), found that concessional capital - where countries receive finance at below-average interest rates - can help make renewables like wind and solar cost-competitive with fossil fuels more quickly.
The paper quantifies for the first time how much concessional financing could lower the Levelised Cost of Energy (LCOE).
A number of regions are thought to have already reached a tipping point where renewables have become the economic choice for new electricity capacity development, but the report suggests concessional finance could play a key role in accelerating this trend across more geographies.
For example, the report highlights how in Thailand concessional finance could ensure the tipping point occurs two years earlier than under standard financing arrangement, while in India concessional finance could ensure renewables become cheaper than fossil fuels four years earlier than projected.
"Concessional finance has the potential to take developing nations' clean energy markets to the next level," said Luiza Demôro, lead author of the report. "With access to cheaper finance, many emerging countries would be able to kick-start their battery storage sectors and avoid capacity additions from fossil fuel-fired plants."