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Solar Investments Trump Gas in Emerging Economies Despite Rising Global Capital Costs

In a recent IEA survey on the cost of capital, clean energy investments in solar photovoltaic (PV) projects are revealed to be less risky than gas power ventures in emerging and developing economies. This revelation comes at a time when the cost of capital is escalating globally, with 2023 poised to witness a further increase.The surge in borrowing costs worldwide, excluding China, follows 11 interest rate hikes by the US Federal Reserve since March 2022. This has led to a target rate exceeding five percent, a stark contrast to just over one percent in February 2022. As a consequence, financing costs have risen not only in advanced economies but also in emerging and developing ones, where such costs are at least twice as high. Recognizing the critical role of the cost of capital in facilitating the energy transition, the International Energy Agency (IEA) launched the Cost of Capital Observatory in 2022. This initiative aimed to collect data, through surveys, on the cost of capital for clean energy projects in emerging and developing economies. In 2023, the IEA conducted a second survey, expanding its geographical reach to include countries such as Kenya, Peru, Senegal, and Vietnam, and incorporating new technologies like utility-scale batteries and offshore wind alongside solar PV and gas power projects.

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146 more agrees trigger scaled up advertising

  • walter lungayi

    15 w

    It indicates a growing recognition of the long-term benefits of renewable energy. This shift reflects a strategic response to environmental concerns and the potential for sustainable economic development.

    • Rashid Kamau

      18 w

      It'll be a turning point when we'll wholly transition to clean energy.

      • George Kariuki

        19 w

        The shift towards favoring solar investments in emerging economies signals a positive trend for the broader adoption of renewable energy.

        • Elizabeth Gathigia

          19 w

          Investing in clean energy will give the world a restoration

          • Grace Njeri

            11 w

            @elizbeth_gathigia Clean energy can greatly create a sustainable future.

          • CHRIS NGATIA

            19 w

            Clean energy investment is turning out to be more successful

            • rosebellendiritu

              19 w

              @chris_ngatia it's the best option worth utilisation

            • Princess

              19 w

              Investing in solar energy is proving to be more successful than investing in gas in developing countries, even with the increasing global costs.

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