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Developing countries see significant growth in renewable energy financing

Global finance to developing countries in support of clean and renewable energy reached US$21.3 billion in 2017, compared with 2010 when international financial flows were US$10 billion, according to a new indicator under the Sustainable Development Goal 7.

The new indicator, monitored by the International Renewable Energy Agency (IRENA) and the Organisation for Economic Co-operation and Development (OECD), tracks global capital flows to developing countries in pursuit of affordable, reliable, sustainable and modern energy for all. By tracing international financial flows to developing countries, the new SDG7 indicator aims to enhance international cooperation and promote investment in energy infrastructure and clean energy technology by 2030.

Despite recent fluctuations, the long-term trend for investment keeps increasing and could reach more than US$20 billion annually in the years to come, IRENA says.

Between 2000 and 2017, total investment to developing countries for clean and renewable energy reached a cumulative sum of US$138.9 billion. The total flows continued to grow since 2010, from US$10 billion to US$21.4 billion in 2017. Depending on the timing of large-scale investments in hydropower, these flows can vary considerably from year to year. However, the broad trend shows a 15-fold increase from 2000 to 2017, reflecting an increased focus of development aid on clean and renewable energy.

While hydropower has historically received the lion’s share, investments in wind, geothermal and solar energy have grown significantly in the past few years. Hydropower investments accounted for about 60% of international investment flows in renewables in the first decade. Flows to other technologies were generally small, with most projects focusing on providing technical assistance or supporting small-scale infrastructure developments.

Since 2009, the share of hydropower has fallen to 45%, while wind, geothermal and, especially, solar energy have gained ground. The scale of projects has also increased, from an average of US$10 million per project in 2000 to 2009 to US$19 million from 2014 to 2017.