Access To Public Finance Key To Clean Energy Adoption In India: IEA

Access To Public Finance Key To Clean Energy Adoption In India: IEA

The International Energy Agency (IEA) recently reported an increased usage of modern renewable energy between 2010 and 2021. The United Kingdom and Indonesia have reportedly made the greatest progress in the use of modern renewables (up 9 and 7 percentage points, respectively, in total final energy consumption). The two countries were closely followed by China, India, and Germany, which reportedly increased between 6 and 7 percentage points.

Solar according to the IEA study is perceived as a solution for rural communities, through solar water pumps, refrigerators, agro-processing machinery, and a wide range of equipment for microenterprises. It’s estimated to contribute towards socio-economic progress and improvement in quality of life. Together, as per the study, they can increase incomes and raise productivity, contributing to job creation, the emergence of new enterprises, and economic growth.

IEA found, “In 2021, 80 percent of commitments were spread among 19 countries, as opposed to 25 countries in 2022. The top five recipients of international public flows in 2022 were Brazil, South Africa, Egypt, Uzbekistan, and India. The 45 least-developed countries received slightly more (+8 percent) international flows for clean energy in 2022 (USD 2.3 billion) than in 2021 (USD 2.1 billion).”

The report identified a disparity between the demand for clean energy and the available funds to make it accessible. It showed, “Whereas, there are 45 least-developed countries that received slightly more (+8 percent) international flows for clean energy in 2022 (USD 2.3 billion) than in 2021 (USD 2.1 billion), but relative to the total flows the share of money going to these countries decreased from 17 percent to 15 percent.”.

Debt instruments accounted for two-thirds of flows in 2022, down from more than 90 percent in 2010, according to the report, and the share of grants, equity, and guarantees grew by 50 percent over 2021. Despite this, 685 million people are reported to continue to live without access to energy and clean cooking due to inadequate financing. Thus, the IEA study emphasized that developing more innovative financing instruments and initiatives is needed to support underinvested countries to benefit from the energy transition without compromising their fiscally constrained economies. In this public finance plays a pivotal role in providing energy service solutions to unserved and underserved areas, mobilizing private capital to this end, and bridging the gap, said the report.   

The IEA report showed that, Although international public financial flows to developing countries in support of clean energy research and renewable energy production rebounded to USD 15.4 billion in 2022 (a 25 percent increase from 2021), support remains far short of the 2016 peak of USD 28.5 billion. 

The report showed, that “According to the metric shared by the report, 92 percent of progress in the global access rate since 2010 can be attributed to progress in only six countries namely (Mexico, France, Indonesia, Japan, Türkiye, and Italy, meaning only 8 percent of global gains were seen in all other countries combined. While was made in a handful of countries (four of which are the most populous globally), a number of less-populous countries have been lagging. Thus, if current trends continue, the overall access rate to clean cooking will reach only 61 percent in LMICs, excluding the five most populous LMICs.” The study associated the higher global access rates is driven by progress in the most populous LMICs, such as India, China, Indonesia, Nigeria, and Pakistan (United Nations 2018). 

The higher global access rates are driven by progress in the most populous

IEA recently released a report on tracking Sustainable Development Goals (SDG-7) on providing affordable and clean energy. It found that the access deficit has fallen consistently in Eastern Asia and South-eastern Asia since 2000, and in Central Asia and Southern Asia since 2010. Looking at countries, the improvement has been driven chiefly by progress in the most populous low- and middle-income countries, such as India, China, Indonesia, Nigeria, and Pakistan.

The report compared and found that most of the global access deficit was in Central Asia and Southern Asia. In 2022, an estimated 33 percent of people living in Central Asia and Southern Asia were still using polluting fuels and technologies for cooking.

Other reports such as a World Bank study found that standalone off-grid solar solutions, including solar lights and solar home systems, were estimated to serve 490 million people in 2022. IRENA estimates that 158 of the 490 million had access to solar lights and home systems meeting international quality standards.

The World Bank has estimated around 47 million people were connected to 19,000 mini-grids as of 2022. Additionally, hydropower and solar technologies were also reportedly deployed which accounts for a third of the total mini-grids installed. The study included stand-alone systems in remote and sparsely settled areas in decentralized solutions. It according to the study offered a cost-competitive alternative to grid expansion and can be rapidly deployed to meet levels of demand too low to justify grid investments.