28 Jul Renewable energy is critical to delivering green, secure and affordable energy
Renewable energy has the power to support countries tackle climate change, increase resilience to volatile prices and reduce overall energy costs. This is particularly important now with escalating fossil fuel costs worldwide.
For years, economic and science-based organisations have encouraged global leaders to create policies that support renewable energy as a core part of tackling climate change. Aside from reducing emissions, large-scale renewable energy projects can deliver major economic benefits for investors, governments and the customer.
Why are many nations still so dependent on fossil fuel imports?
Developing nations may not have the available funds to develop new infrastructure, well planned renewable energy projects can attract private investment to enable progress. For many years, fossil fuels were inexpensive, so investing in new clean energy projects was difficult for many countries.
Transforming the higher initial capital to yield long-term benefits requires reasonable access to finance. This general lack of access to finance in developing countries makes this initial investment in renewable energy unaffordable. Other political and economic uncertainties can deter private investors from supporting renewable energy. Breaking ties with fossil fuels has become even more of a challenge as countries focus on short-term solutions to manage fuel shortages.
Luckily, we have experienced rising interest in large-scale infrastructure. In 2020, public and private sectors invested over $300 billion in renewables, though this figure needs to increase much further to reach net-zero by 2050. To attract additional financing developing countries need to create a series of large-scale renewable energy projects that generate a return on investment, while maintaining costs for the customer.
At the Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG), countries discussed establishing a path toward self-sufficiency and economic gains through adopting renewable energy. Morocco for example, has developed several renewable energy projects that now provide nearly 40% of its installed energy capacity, and reports suggest it will exceed 50% by 2030. Dr Leila Benali, the Minister of Energy Transition and Sustainable Development in Morocco, explains that they focused on creating comprehensive policies for years that directly support renewable energy infrastructure and, as a result have attracted over $5 billion in investments. The pipeline of projects has received government support through new policies, providing investors with the confidence to supply the capital needed.
Dr Benali highlights that the return on capital invested in projects, particularly wind, solar and hydrogen continues to improve and support their sustainable strategy. The Noor Ouarzazate Solar facility in Morocco is the largest solar power plant in the world, with a total capacity of 580MW and enough energy to meet the demands of a million properties. Morocco has created a series of large-scale wind farms and several incentives for businesses and communities to invest in domestic solar power.
Another example is India, which has experienced a profound increase in renewable electricity. Indu Shekhar Chaturvedi, the Secretary of the Ministry of New Renewable Energy, explains that India took a proactive approach by creating incentives and risk management strategies at an early stage so businesses could integrate renewable energy without the risk of incurring an economic loss.
Examples from India and Morocco provide a clear pathway for other nations that lack a reliable pipeline of energy projects. Governments must create a way for the private sector by developing bold clean energy targets, investor-friendly legislation and utilising financial institutions to manage possible risks.
The World Bank Group supports nations like India and Morocco in developing renewable energy cheaper, quicker and better by using a portfolio of bankable renewable energy projects. In the last few years, the World Bank invested over $8 billion in clean energy and generated over $20 billion in private investments in renewable energy generation capacity. Moving away from fossil fuels could feel like a challenge in these current times, but it will inevitably become more difficult and expensive as time progresses. We now have the technology and financial tools to deliver a greener world while at the same time improving our resilience and economies. The time is now to invest in renewable energy, not the future.