Renewable energy capacity has grown rapidly around the world – 84 percent from 2014 to 2022 alone, to 3,372 GW. Yet, except for China, developing and emerging economies have lagged behind, accounting for less than a fifth of the capacity added in 2016–2021, despite having huge potential.
A key reason for this disparity is that power systems need to be revamped to integrate variable energy sources such as solar and wind, and that is costly and technically challenging.
Recognizing an unmet need, in 2021, the Climate Investment Funds launched the Renewable Energy Integration (REI) program to help low- and middle-income countries upgrade their power grids, adopt innovative technologies, and seize opportunities to use clean energy to advance development goals.
“REI was designed to help fill a gap in international climate finance,” said Daniel Morris, Clean Energy Lead at CIF. “Renewables have a lot of momentum – in many places, they’re already the cheapest source of new energy. But countries need support to get their energy systems ready to make the most of their renewable energy potential. That’s why REI is such a game-changer.”
In its first round, REI is working with six countries. Brazil’s and Colombia’s investment plans have already been approved – $70 million each, delivered in partnership with the Inter-American Development Bank, IFC and the World Bank.
Other countries developing REI plans include Fiji, Kenya, Mali, Ukraine, Costa Rica, India, Indonesia, and Türkiye.
Colombia’s plan, announced in February 2023, will support four types of projects aligned with the country’s energy transition roadmap: rural electrification using renewables; infrastructure upgrades such as new transmission lines, advanced metering infrastructure, and energy storage solutions; electrification of the transport sector by financing charging infrastructure and EVs; and supporting the deployment of more renewables such as green hydrogen and offshore wind.
“Colombia wants to reduce greenhouse gas emissions by 51 percent by 2030, and to achieve this, it has launched a green energy transformation,” said Javier Campillo, Director General of IPSE Colombia, a national institute focused on energy access. With REI, he added, “we’re making sure that this is not only a technical transition, but a just energy transition, where we include communities and enable them to benefit from the projects.”
Colombia added 892 MW of renewable energy capacity in 2022 alone, including 288 MW of solar, but non-hydro renewable sources remain less than 2 percent of the country’s power mix. Through the REI investments – and the co-financing they leverage from public and private sources – Colombia expects to reduce its emissions by 1.644 mT CO2eq over the lifetime of the projects and 110 kT CO2eq / year by 2030 while improving energy access for nearly 20,000 households and reducing power system costs.
Brazil’s plan, approved in June 2023, will accelerate the deployment of solar and wind power across the country by adding technologies that increase the flexibility of the energy system, such as smart metering and multiple kinds of energy storage, and support the addition of another 8 GW of renewable capacity, reducing emissions by 24 Mt CO2e to 2030.
“The program will catalyze, accelerate, and secure investment into the renewable energy system in Brazil,” said Jimmy Pannett, REI program co-lead.
Like Colombia, Brazil has long relied on hydropower for clean energy, but as droughts have made the supply less reliable, it has become more dependent on fossil-fueled generation. Solar and wind are starting to close that gap, accounting for 3 and 11 percent of total generation in 2021 – and almost 10 GW of solar and 3 GW of wind capacity were added in 2022 alone.
Brazil’s REI investment plan is expected to leverage $9.1 billion in co-investment, including $8 billion from the private sector. One of the most exciting elements is a plan to develop a hydrogen hub in Pecém, near Fortaleza in Brazil’s Northeast – an opportunity to play a big role in the decarbonization of heavy industries such as steel. By 2034, the hub is expected to produce 1 Mt of hydrogen per year, said Mariana Especie, Director of Energy Transition at Brazil’s Ministry of Mines and Energy.
Like Colombia, Brazil has made it a priority to ensure that communities benefit broadly from REI investments. Especie said high standards are being set for gender and social inclusion in the places where projects are developed. And the Amazon region, where many inhabitants are not connected to the national grid and depend on diesel-fueled power plants, will get an infusion of new clean energy.
“We aim to introduce variable renewable energy to these systems to guarantee more security and stable energy to those communities,” Especie said. “We are talking about 3 million Brazilians that live in these areas.”