Financing energy access
Worldwide in 2013, an estimated $13.1 billion in capital investment was directed to improving access to electricity and clean cooking facilities. Overwhelmingly, these energy access investments went to the power sector, either to increase generation capacity or to extend transmission and distribution networks, with only 3% being directed at increased access to clean cooking facilities. This figure of $13.1 billion is an increase, relative to previous WEO estimates ($9.1 billion in 2009), but the estimate is tentative – it may well be an under-estimate.
World energy access investment by type and source, 2013
This capital comes to the energy sector from a variety of sources: self-financing by the energy investor; by an allocation from the state budget; or external financing, via bank lending and the capital markets, but the information available is poor, particularly on private sector investments, south-south investment flows (which can, as in the case of China, be significant) and the financing of mini- and micro-scale projects. Our tentative estimate is that the proportionate reliance on different sources is as follows: developing countries own budgets, 37%; multilateral organisations, 33%; private investors, 18%; and, bilateral aid 12%. While governments remain a critically important source of financing for energy access, many have also opened up their energy sectors in full or in part to private investors in recent years. The need for capital and expertise has made public- private partnerships (PPPs) an important area of focus. The African Energy Leaders Group, launched in January 2015, is working towards universal energy access through PPPs and commercially viable regional power pools, and SE4All is working with countries to develop energy investment prospectuses, often including PPPs.
Development assistance (through bilateral or multilateral channels) continues to be an essential source for many energy access investments, typically in the form of loans at concessional rates or loans to projects deemed too risky by the commercial banking sector. The African Development Bank has contributed to financing around 2 GW of new generation capacity and over 15 000 km of transmission lines since 2009, while the OPEC Fund for International Development has turned a $1 billion pledge to alleviate energy poverty, made in 2012 into a revolving fund. The European Union has committed €3.5 billion ($3.9 billion) with the intention that it should leverage €30 billion ($33 billion) in power sector investments; and the US Power Africa initiative has achieved financial closure on 4 GW worth of projects, involving $9 billion of commitments from government and aid sources, and $20 billion from the private sector. The Global Alliance for Clean Cookstoves remains a key source of funding for clean cooking facilities, drawing on grants and investments from governments, corporations, civil society and others to support its goal of providing clean cooking facilities to 100 million households by 2020.
Our work on Energy access
- Electricity in every village in India
1 June 2018
- IEA and African Union sign strategic partnership on sustainable energy for all goals
25 May 2018
- Progress on global energy goals slow, but strong gains in countries show promise
2 May 2018
Events & workshops
WorkshopIdentifying Technology Innovation Needs and Opportunities Under Mission Innovation Challenge n°2: Off-grid Access to Electricity OECD Conference Centre, 2 rue André Pascal, 75016 Paris, France
WorkshopIEA Workshop on Energy for all: Financing access for the poorIEA, Paris