Odyssey Library

A collection of research to help you better understand and navigate the distributed renewable energy landscape in emerging markets.

The Shell Foundation Pilot Programme for Innovative Financing and Project Solutions Final Report

Odyssey Energy Solutions, Economic Consulting Associates Limited
Report highlights

Through the pilot program, eleven health facilities across four countries were targeted by six project developers (Stella FuturaPowerGen Renewable EnergyHavenhill Synergy LimitedNuruARESSZhyphen), serving hundreds of thousands of total patients. Alongside directly impacting health outcomes in these communities, the pilot program aimed to: 

🔸 Explore the key factors of financing solutions that can ensure the timely deployment, scalability, and long-term sustainability of health-electrification projects

🔸Identify where technology can contribute to the scalability and longevity of healthcare initiatives through Odyssey’s Powering Health Platform

The Final Report dives into findings from the pilot, as well as recommendations for the sector when planning future initiatives, highlighting the importance of context-specific strategies, efficient data management, and strong collaboration to optimize electrification of healthcare facilities. 

Health Facility Electrification Capital Landscape

Sustainable Energy for All
Report highlights
  • Across markets examined, there is an investment need of ~$2.6B, with $1.4B for public facilities and $1.2B for private facilities – India and Nigeria make up ~70% of total need
  • Markets assessed need ~$1.4B in public facility investment, but unreliable government payors and inconsistent delivery of quality O&M pose challenges
  • To address private facility demand, ~$1.2B is needed in markets assessed – despite higher ability to reliably pay for power, these facilities also encounter barriers
  • Developers face challenges serving different facility types, as stability of payments and frequency of system maintenance can both vary heavily
  • While most donor funding has been capex grants, new approaches are being tested which could unlock commercial capital investing in distributed energy
  • There are several potential de-risking mechanisms that, if implemented, could catalyse the deployment of at-risk capital into HFE

X-Change: Electricity On Track for Net Zero

Report highlights
  • Solar and wind generation are on an exponential growth path which will lead to disrup- tion of the global electricity sector this decade, but not to 1.5°C — that requires faster change. 
  • What is the X-change? The X-change isolates and models exponential growth and assumes the rest of the system is forced to adjust. Its conclusions are very different from the ortho- dox approach, which focuses on barriers, models linear change, and has been consistently wrong. 
  • Solutions are bigger than barriers. There is a conundrum at the heart of renewable growth: Barriers are everywhere, but growth keeps happening. The reason is that barriers are specific and local, but solutions are generic and global, hence likely to overwhelm re- sistance to change. 
  • Change is fast or faster. Linear change is no longer credible. Change to the electricity sys- tem will take place either fast (on a typical technology S-curve) or faster (continued exponen- tial growth). 
  • Solar and wind power will grow by 3–4 times by 2030. Fast growth will lead to a tripling in solar and wind generation by 2030 while faster growth will mean a quadrupling in genera- tion, to produce more than 14,000 terawatt hours (TWh) and overtake fossil fuel supply. 
  • The fossil fuel era is over. Fossil fuel demand in electricity has reached a peak at around 18,000 TWh, will plateau for a few years, and will fall by between 16% and 30% by the end of this decade. 

Scaling Up Private Finance for Clean Energy in Emerging and Developing Economies

International Energy Agency and the International Finance Corporation
Report highlights
  • Private finance into clean energy projects in emerging markets will need to rise to USD .9-1.1 trillion annually by the early 2030's, up from USD 135 billion today 
  • To strategically mobilize such an increase in private finance, concessional finance needs to scale as well, with a focus on guarantees, senior or subordinated debt/equity, performance-based incentives, swap cost buydowns to de-risk private investments 
  • Better data is essential to enable private investors to assess the true risks associated with emerging/developing market investments

The $60B Global Climate Finance Startup

Climate Tech VC
Report highlights
  • $19B today in climate finance going into Sub-Saharan Africa in 2020 – and that is a fraction of what will flow
  • Over 75% of total climate finance flows to the US, Canada, Western Europe, and China, despite future emissions overwhelmingly growing in emerging economies. DFIs like the Development Finance Corporation (DFC) are increasing committing to changing this; DFC alone has a $60B mandate

Global Landscape of Renewable Energy Finance 2023

Internation Renewable Energy Agency
Report highlights
  • Investments in off-grid renewable energy solutions in 2021 USD and was .5B short of USD 2.3bB needed to accelerate progress toward universal green access 
  • 70%  of the world’s population (mostly in developing / emerging markets) received only 1.55% of global investments. Sub Saharan Africa received less than 1.5% of renewable energy investment made between 2010 and 2021
  • In off-grid sector, average transaction size climbed from USD 1.1M in 2017 to USD 3.7M in 2021 - shows sector growth and maturity, may also indicate challenges for enterprises looking for smaller investments 
  • The share of off-grid investments for C&I went from 8% in 2015  to 32% in 2021 as consumer needs grow beyond basic household access to more energy-intensive uses in local industry and agriculture. C&I applications can promote local economies by creating jobs and spurring economic growth while enhancing food security 
  • More innovative financing instruments are needed to help under invested countries reap the long term benefits of the energy transition without putting their fiscally constrained economies at further disadvantage 
  • Low cost local currency financing will be preferred for the next phase of off-grid renewable energy sector’s development. A complimentary mechanism to address foreign currency risks is to facilitate local currency lending  for projects with development capital channeled through intermediaries  including national banks or non-banking  finance institutions  
  • The world  is not on track to achieve universal energy  access by 2030 - 670M are expected to be without electricity and 2.1B without access to clean cooking. Scaling investment and policy support in the off-grid renewables sector will be crucial to closing the access deficit. 
  • From 2012 to 2019, populations served by off-grid renewables increased from 35M to 213M, generating a range of socio economic and environmental benefits 
  • There is a big opportunity for DFIs to partner with local financing institutions to deliver local currency debt 
  • Blended finance mechanisms: In 2020-2021, 26.5% of investments committed during that time period was mobilized through blended financing approach comprising of a mix of debt, equity, grants and risk-mitigation instruments

Africa Energy Outlook 2022

International Energy Agency
Report highlights
  • Electricity is the backbone of Africa’s new energy systems, powered increasingly by renewables.
  • Renewables, including solar, wind, hydropower and geothermal account for 80% of new power generation  capacity to 2030” (according to their Sustainable Africa Scenario SAS)
  • Multilateral development banks must make increasing financial flows to Africa an absolute priority - to mobilize the amount of investment envisioned in the SAS, they will need to increase concessional finance to Africa and use it more strategically to better leverage private capital
  • In 2020, 78% of sub-Saharan Africa’s debt was concessional, from bilateral (47%) or multilateral  (31%) sources; in 2022, only 25% is multilateral concessional and 20% bilateral, with private creditors accounting for 56% of total
  • Solar installations are gaining momentum. In sub-Saharan Africa (excluding  South Africa), 13 countries now have more than 50 megawatts of installed capacity, a level reached five years ago by only Namibia and Senegal
  • Bringing access to modern energy or all - - Africa calls for investment of $25B USD / year - a sum equivalent to the cost of building just one LNG terminal and just 1% of global energy investment today
  • Extending national grids is the least costly and most prudent option for 45% of those in need of power gaining access. In rural areas, where 80%of the electricity deprived live, mini-grids and stand alone systems, mostly solar-based are the most viable solutions

The Action Plan for Climate and SDG Investment Mobilization

Convergence, USAID, Prosper Africa
Report highlights
  • The development finance system currently provides and mobilizes just 5% ($240 billion) of the $4.5 trillion in annual investment needed for Emerging Markets and Developing Economies (EMDEs) to achieve the climate and Sustainable Development Goals (SDG) objectives. Private capital is crucial to closing this gap, yet the development finance system as a whole has averaged an anemic $45 billion/year of private investment mobilization3 over the last five years.
  • Five large investor groups representing over $130 trillion in assets under management and a core group of donor governments and philanthropic foundations have together outlined an Action Plan for Climate and SDG Investment Mobilization, a roadmap that would more than double total investment into developing economies to $530 billion, including a significant increase in private investment mobilized to $286 billion, with no additional public sector financial resources necessary.
  • The Action Plan builds on 15+ years of evidence and 750 blended finance transactions to address the two enduring constraints to greater long-term capital flows that build resilient societies: increasing the number of investable climate and SDG projects and increasing the supply of capital willing and able to invest in these projects in EMDEs.
  • Key pillars include (i) increasing the supply of flexible catalytic funding that can be used to help investors mitigate key risks that are preventing them from investing in EMDEs at scale; (ii) establishing a Catalytic Funding Network and an Investment Mobilization Hub to coordinate stronger de-risking integration among MDBs/DFIs, donor governments, philanthropic institutions, and private investors, and (iii) empowering domestic financial intermediaries and capital markets

Mobilizing Capital Into Emerging Markets and Developing Economies

Report highlights
  • Investment into renewable energy capacity in EM&DEs saw a 41% spike in the five years ending in 2021, compared to 2012-2016. Solar led the growth with a doubling of investment, followed by wind with a 34% increase

Annual Solar Outlook 2023

Africa Solar Industry Association
Report highlights
  • In 2022, Africa saw the installations of almost 1GW of new PV capacity, a 14% y-o-y growth compared to 2021 
  • C&I projects saw a 61.5% y-o-y growth. With recent multiple announcements of large ticket financing deals for C&I projects and M&A activity in the segment, it is easy to imagine that this trend is set to continue
  • Mini-grids regressed by 18%  y-o-y  in terms of capacity installed, the sector is still very dependent on concessional capital (or lack thereof). Nigeria  led the charge with mini-grids, installing close to 1.5MW of new capacity, followed  by Mali, Uganda, Kenya and Mozambique
  • Top 5 countries with the most solar installed in 2022 are Angola, South Africa, Egypt, Ghana and Mozambique. If you look at solar installed  per capita, the picture changes a bit with the top five countries are Seychelles, Namibia, Cape Verde, South Africa
  • Another exciting trend for solar in Africa is explosive growth in e-mobility. Recent technology makes it much more cost effective to drive an electric motorbike compared to an internal combustion engine one. AFSIA’s info indicates that to support commercial mototaxis to switch to electric, most African countries might need to double or triple their existing installed capacity  

The Big Emerging Question: How to Finance the Net-Zero Transition in Emerging Markets

BlackRock Investment Institute
Report highlights
  • Emerging markets (EM) will need at least US$1 trillion per year to achieve net-zero emissions by 2050 – more than six times current investment
  • Public budgetary resources have been shown to be successful in attracting private capital. 
  • For larger volumes of public budgetary resources to be effective in mobilizing private capital at scale, they need to be deployed following a number of key principles

Financing Clean Energy Transitions in Emerging and Developing Economies

International Energy Agency
Report highlights
  • By the end of the 2020s, annual capital spending on clean energy in developing economies needs to expand by more than seven times, to above USD 1 trillion, in order to put the world on track to reach net-zero emissions by 2050. Such a surge can bring major economic and societal benefits, but it will require far-reaching efforts to improve the domestic environment for clean energy investment within these countries – in combination with international efforts to accelerate inflows of capital

A Green Reboot for Emerging Markets

International Finance Corporation
Report highlights
  • Supporting investment and channeling recovery funds into climate-smart business in the key sectors across the 21 emerging markets represents a $10.2 trillion investment opportunity for both the public and private sectors.
  • Progressive private companies and institutional investors are ready to take advantage of new green business opportunities and lead the transition to a global low-carbon economy

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