Renewable energy in developing countries is becoming a common choice instead of fossil fuel energy as these countries increase their energy supplies and work to reduce energy poverty. In the past, renewable energy technology was considered too expensive for developing countries. However, since 2015, investments in non-hydro renewable energy have been greater in developing countries than in developed countries. In 2019, these investments made up 54% of global renewable energy investment. The International Energy Agency predicts that renewable energy will supply most of the energy growth in Africa and Central and South America by 2030, and 42% of the energy growth in China.
Most developing countries have large amounts of renewable energy resources, such as solar energy, wind power, geothermal energy, and biomass. These countries also have the ability to produce the labor-intensive systems needed to use these resources. By developing renewable energy sources, these countries can reduce their reliance on oil and natural gas, creating energy systems that are less affected by rising prices. In many cases, investing in renewable energy can cost less than building fossil fuel energy systems.
In remote rural areas, expanding electricity grids is often not cost-effective. Off-grid renewable technologies offer a long-lasting and affordable alternative to diesel generators that would otherwise be used in these areas. Renewable technologies can also replace other harmful energy sources, such as kerosene lamps and traditional biomass.
Kenya leads the world in the number of solar power systems installed per person (but not the total power produced). More than 30,000 small solar panels, each producing 12 to 30 watts, are sold in Kenya each year. Kenya was the first African country to use geothermal power and still has the largest geothermal power capacity in Africa at 200 MW, with the potential to grow up to 10 GW.
Rationale for renewable energy
In 2009, about 1.4 billion people worldwide did not have access to electricity, and 2.7 billion used wood, charcoal, and animal waste for home energy needs. This lack of modern energy technology makes it harder to escape poverty, limits income opportunities, harms health, and contributes to deforestation and climate change. Small renewable energy systems, like solar power and improved cookstoves, can provide modern energy services to rural homes.
Renewable energy is especially useful for developing countries. In remote areas, sending energy from fossil fuels can be difficult and costly. Creating renewable energy locally offers a practical solution.
Renewable energy is not only found in developing countries. The Developing Areas Study Group is a group of experts from various energy businesses who discuss ways to help developing countries gain access to renewable energy. Papers by W. Morgan, R. Moss, and P. Richard describe opportunities for using renewable resources in developing countries. Morgan and Richard suggest that firewood and agriculture could help create alternative energy solutions. Richard also notes that using agriculture efficiently could produce renewable energy. Morgan adds that green plants could be used to make synthetic fuel alcohol, which could benefit both developing countries and the world by providing an alternative fuel.
Interest in renewable energy has grown because of concerns about climate change and air pollution, lower technology costs, and better performance. In recent years, programs supported by governments, businesses, nonprofits, and community groups have helped expand access to off-grid energy technologies. Program planners should focus first on solutions that provide the most energy access with the least effort.
Use of renewables
Developing countries together have more than half of the world's renewable power capacity. China and India are growing quickly in their use of renewable energy. Brazil makes most of the world's ethanol from sugar and is building more biomass and wind power plants. Many countries, including Argentina, Costa Rica, Egypt, Indonesia, Kenya, Tanzania, Thailand, Tunisia, and Uruguay, are seeing fast growth in their renewable energy markets.
In remote rural areas, it is often too expensive to extend electricity grids. Off-grid renewable energy systems offer a better and cheaper option than using diesel generators in these places. Renewable energy can also replace other harmful energy sources like kerosene lamps and traditional biomass.
New technology is helping create a solar power market for the 1.3 billion people worldwide without access to electricity. Most of these people use kerosene lamps, and solar power is now about half the cost of using kerosene. Around 3 million homes use small solar power systems. Kenya leads the world in the number of solar systems used per person. Over 30,000 small solar panels, each producing 12 to 30 watts, are sold in Kenya each year.
Micro-hydro systems, set up as village or county mini-grids, provide energy to many areas. More than 30 million rural homes use biogas from small household systems for lighting and cooking. These stoves are made in factories worldwide, and over 160 million homes now use them.
Renewable energy projects in developing countries show that renewable energy can help reduce poverty by providing the power needed for jobs and businesses. It also helps reduce poverty indirectly by providing energy for cooking, heating, and lighting.
Renewable energy can improve education by giving schools electricity. Using renewable energy for cooking and heating can save children time from collecting fuel, allowing them to stay in school. There is a strong need for clean energy workers in Africa, but many universities there still train more workers for fossil fuels than for renewable energy. This means there are not enough skilled workers for solar and wind energy jobs.
About 2.4 billion people use traditional biomass, such as wood, plant waste, and animal dung, for cooking and heating. Using these fuels leads to indoor air pollution levels much higher than World Health Organization (WHO) standards. Traditional stoves that use dung and charcoal release large amounts of harmful gases like carbon monoxide. Women and children are most affected because they spend the most time near these stoves. Serious breathing problems affect up to 6% of the world's population. The WHO estimates that 2.5 million women and children in developing countries die each year from breathing fumes from indoor biomass stoves.
Renewable energy can help by reducing exposure to harmful indoor pollutants. It can also provide electricity to refrigerate medicine and clean medical equipment in areas without reliable power. Renewable energy can also supply power for fresh water and sewer systems, which help prevent the spread of diseases.
Government policies
More developing countries are putting in place public policies needed to grow renewable energy technologies and markets. These areas have usually been led by Europe, Japan, and North America. Exceptions include countries like Brazil, which has created the world's top biofuels industry, and China and India, which are leading in developing small renewable sources such as small hydro, small wind, biogas, and solar water heating. These countries use policies like feed-in tariffs. Also, the Kyoto Protocol includes a program called the Clean Development Mechanism (CDM), which lets industrialized nations invest in projects that reduce emissions in developing countries instead of spending more money to reduce emissions in their own countries.
Developing-country governments must guide resources for large investments into new industries and technologies. Some say policies should focus on active industrial strategies that combine large investments with direct policy actions. Subsidies are needed to make these energy services affordable for most people.
The Philippine government believes growing the renewable energy sector is essential for national energy security. The country's fossil fuel sector is not sustainable because it depends on imported nonrenewable fuels like petroleum. However, the Philippines has strong potential in renewable energy. A report from an Australian consulting firm, International Energy Consultants, shows the Philippines has the highest electricity rates in Asia, followed by Japan. Sending power and fuel across the Philippine islands is expensive because of high costs. Compared to other Asian developing countries, the Philippines has higher electricity prices because it relies on imported fuels, has no government subsidies for electricity generation, and faces high taxes across the energy supply chain.
The Philippines could be a global leader in renewable energy, as 30% of its power comes from renewable sources. The country is the world's second-largest producer of geothermal energy and the first Southeast Asian nation to invest in large-scale solar and wind technologies.
Support for renewable energy grew after the Renewable Energy Act of 2008 was passed. This law introduced feed-in tariffs and a renewable portfolio standard. The Philippines aims to triple its renewable energy supply by 2030.
Recently, the government signed agreements with private companies for large projects in Oriental Mindoro, which will eventually produce 48 MW of power. Future plans include even larger developments. Despite government efforts, some investors have criticized the government for not being firm enough with its feed-in tariff policy, and the solar industry has accused the government of slowing progress in the country.
On February 3, 2011, Algeria started the National Development Program for new and renewable energy and energy efficiency. This program, from 2011 to 2013, aims to generate 22,000 MW of electricity from solar and wind power, with 10,000 MW for export.
In Kenya, the Ministry of Energy and Petroleum manages renewable energy policies. In March 2008, the country adopted a feed-in tariff policy. In January 2010, the policy was updated to encourage private companies to invest in renewable energy.
Kenya was the first African country to use geothermal power and still has the largest geothermal capacity in Africa at 200 MW, with potential up to 10 GW. Only Ethiopia in Africa also uses geothermal power.
Kenya has expanded its use of wind energy as part of its goal to increase renewable energy. In 2022, wind turbines produced over 6,844 GWh of electricity, mostly from projects like the Lake Turkana Wind Power project. This has helped Kenya use its wind resources effectively.
Kenya leads the world in the number of solar power systems installed per person, though not in total watts. Over 30,000 small solar panels, each producing 12 to 30 watts, are sold in Kenya each year. For about $100, a solar panel and wiring can power a car battery, which can run a light or small TV for a few hours daily. More Kenyans are choosing solar power instead of connecting to the electric grid because of high connection costs and abundant sunlight.
In 2021, the European Investment Bank gave €315 million in loans to two private companies for renewable energy projects. Most loans focused on climate change and environmental sustainability for public sector borrowers.
The European Investment Bank is also working with a private fund called GEF Latam Climate Solutions Fund to invest $200 million in small and medium businesses in Latin America that support climate action and environmental goals. This investment helps achieve the Sustainable Development Goals, especially in reducing climate change.
Renewable energy provided more than 85.4% of electricity used in Brazil, according to 2009 data from the Energy Research Corporation (EPE). After oil shortages in the 1970s, Brazil focused on alternative energy, especially sugarcane ethanol. Large sugarcane farms helped this effort. In 1985, 91% of cars made that year ran on sugarcane ethanol. Flexible-fuel vehicles, introduced in 2003, and a rule requiring E25 ethanol blends helped ethanol reach 50% of the gasoline market by 2008.
In 2021, Brazil began building wind farms in Paraiba, Piau, and Bahia and solar plants in Paraiba.
Renewable energy provides over 90% of Costa Rica's total energy. The country leads the world in renewable energy use, with major investments in windmill technology. The government's goal is to make Costa Rica the first carbon-neutral country.
In March 2015, the entire country ran for 75 days straight using only 100% renewable energy.
Colombia has become one of the fastest-growing renewable energy markets in Latin America. This growth may be due to the country's wide strategy to shift to renewable energy.
Recent Developments in Financing Renewable Energy
In February 2024, the International Energy Agency (IEA) published a report titled "World Energy Investment Special Report: Reducing the Cost of Capital." The report highlights the importance of increasing investments in clean energy projects in developing countries to achieve global climate and energy goals. It explains that current yearly investments, totaling about US$270 billion, must grow to around US$870 billion by the early 2030s to meet national climate promises. To stay on track for limiting global warming to 1.5 degrees Celsius, investments would need to reach US$1.6 trillion.
Although clean energy investments worldwide increased by 40% since 2020, reaching US$1.8 trillion in 2023, only 15% of this amount went to developing countries. This is a problem because developing countries make up about one-third of the world’s total economic value and two-thirds of the global population. In these regions, the cost of borrowing money is often more than double that in developed countries due to higher concerns about political and economic risks. To address these issues, the IEA report suggests improving rules and regulations, increasing international help, and expanding access to low-cost funding. These steps aim to triple current efforts to close the investment gap in renewable energy projects in developing countries.