The recent launch of a comprehensive report by the International Renewable Energy Agency (IRENA) and the Indian G20 Presidency highlights the significant role that low-cost finance can play in accelerating the energy transition. The report, titled “Low-Cost Energy Transition Finance,” was developed in collaboration with India's Ministry of New and Renewable Energy (MNRE) and presents a toolbox aimed at increasing the availability of affordable capital in G20 countries and beyond.
During a side-event organized jointly by IRENA, MNRE, and the Indian Renewable Energy Development Agency, the report was introduced by Ms. Gauri Singh, IRENA's Deputy Director-General, Mr. Bhupinder S Bhalla, MNRE Secretary, and Mr. Alok Kumar, India's Power Ministry Secretary. The unveiling took place at the G20's 3rd Energy Transition Working Group (ETWG) in Mumbai.
IRENA Director-General, Mr. Francesco La Camera, expressed his satisfaction with the report, stating, “The global energy transition requires a rapid scale-up of renewable energy deployment globally, making access to low-cost finance urgently vital. We are proud to contribute to the work of the G20 and provide valuable insights that support India's Presidency in facilitating access to affordable finance in developing and advanced economies.”
The Preview of the World Energy Transitions Outlook by IRENA reveals that in order to meet the 1.5°C climate goal, the share of renewable energy in the primary energy mix needs to reach about three-quarters. This necessitates average annual investments exceeding USD 5 trillion until 2030. However, many emerging and low-income economies face inadequate and expensive funding, which hinders the acceleration of the energy transition at the required pace.
The report identifies country risk or policy risk as a common obstacle for international institutional capital flows, albeit varying across different countries. It draws upon the cost reductions witnessed in solar and wind power sectors in recent years and presents enabling frameworks that can minimize transaction costs related to technology transfers. These frameworks also facilitate foreign direct investments, thereby expediting the scaling up of critical technologies such as hydrogen, offshore wind, and battery storage in the energy transition's next phase.
Furthermore, the report emphasizes the importance of innovation frameworks in driving improvements in enabling technologies, business models, market design, system operation, technological maturity, innovation, system integration, manufacturing capacity increase, and reduced labor costs.
Low-cost financing has been identified as one of the six key priority areas set by India's G20 Presidency. IRENA is actively collaborating with the Presidency on various other priorities, including resource efficiency and the circular economy in the steel sector.
