We asked experts how we can overcome structural barriers to renewable energy investments
We asked experts how we can overcome structural barriers to renewable energy investments
At Renew2030 we collaborate globally with a diverse range of partners, from grassroots movements to policy think tanks, philanthropies, and climate NGOs. We’ve asked them how they tackle key barriers to renewable energy investments, especially in low- and middle-income countries.
Investments in renewable capacity reached a record high of USD 570 billion in 2023. While this increase massively concerns China, EU, and the United States, Brazil and India accounted for just over 6% of investments, and in Africa, investments fell by 47% compared to 2022. This disparity highlights the need for an inclusive transition to net zero – one that ensures low- and middle-income countries aren’t left behind. These regions face a significant financing gap, with an estimated shortfall of $1.2 trillion annually required to meet their climate goals.
From our interviews with experts and partners working in policy research, investment deployment, and community engagement, three key blockers – and strategies to address them – have emerged across regions and areas of focus.
Shift financial flows
The first barrier that needs to be overcome in many markets is the legacy of subsidies, regulatory frameworks, risk models, and fossil fuel financing. Fossil fuel deployment remains the default in many cases, often requiring a policy pivot from those in power to shift the existing capital into clean energy projects.
Our partners have been actively collaborating with national governments to enable this transition, redirecting fossil-fuel investments to green energy initiatives. For example, Renewables First, is working with ReNew2030’s partner, the Sunrise Project, to help investors pivot from coal to renewables. Renewables First has been working to shift policies to facilitate the flow of capital into renewable energy projects. Efforts on the ground are beginning to yield results: Pakistan has seen a surge in solar capacity, with 15 GW of solar panel imported over the past year, driven by a steep increase in electricity tariffs over the last three years. This rapid shift, mostly toward off-grid solar solutions, underscores the urgent need for grid modernization and policy reforms to support decentralized solar generation, while ensuring the financial sustainability of electricity utilities
Creating regulatory and policy frameworks to attract additional funding
Redirecting fossil fuel investments is just the beginning. To close the $1.2 trillion financing gap for low- and middle-income countries, partners have highlighted the need to attract additional capital, both foreign and domestic.
A core blocker outlined by the experts we spoke to lies in the perceived risk embedded within any regulatory framework that is perceived by markets to be hindering rather than facilitating renewable projects development.
For campaigners and philanthropists, this challenge presents a significant opportunity. Adjustments in regulatory barriers – such as those related to planning or capital requirements – can have outsized impacts on attracting private sector investment.
For example, we’ve supported initiatives like Bangladesh’s Centre for Policy Dialogue, through our partner the Sunrise Project. They collaborate with academics, policymakers, and investors to identify and highlight the domestic investment blockers and operational bottlenecks that prevent large-scale overseas investment in renewable energy-led power generation. These blockers are brought to the attention of national officials and investors at the occasion of Energy Forums bringing all stakeholders together to promote the creation of a new framework that expedites renewable energy investment.
Similarly in Sri Lanka, our partner V20 is engaging strategically with Finance Ministries to develop investment plans to attract foreign investments into renewable energy projects. The Sri Lanka Offshore Wind Roadmap exemplifies what can be achieved with strong regional cooperation that promotes offshore wind development.
Investing in tomorrow’s solutions: enabling funding system-change
Lastly, the experts we spoke to have flagged the need to test models that can attract private capital in large-scale renewable energy projects.
True transformation in the energy transition isn’t just about addressing existing barriers but also about investing in breakthrough solutions before they hit the mainstream. While other stakeholders may not always be able to make these long-term investments due to shorter investment or political cycles, we’ve been collaborating with local players to enable innovative renewable energy funding models that deliver financial, social, and environmental benefits.
When these models are successful, they attract additional private and public capital. A standout example is the RIPLE (the Renewables Investment Platform for Limitless Energy), a $500 million initiative in Nigeria created by the Nigeria Sovereign Investment Authority (NSIA) with support from the African Climate Foundation. This initiative is a system change, unlocking private capital to create a renewable energy system that will benefit Nigerians, and that can be replicated in other regions..
