Drive investment in green energy development, deployment and infrastructure

 
Thanks to enormous cost reductions in recent years, electricity generation from large-scale renewables (notably wind and solar) is becoming cheaper than the generation from fossil fuels, and this trend is expected to continue. The world needs to invest around USD 1.7 trillion between 2015 and 2030 to achieve the Paris Agreement’s renewables targets. For this, investments and financial incentives must be expanded to mobilise private investment in low-emission and climate-resilient infrastructure. Investment and pension funds are showing new interest, which should be encouraged through improved environmental risk analysis, clear frameworks for diversified financial instruments and models, and expediting building permits for clean electricity infrastructure.

Support mechanisms should be applied to provide investment incentives while reducing investment risks in renewable energy projects. Competitive auctions are more cost-effective than administratively set tariffs. Moreover, support mechanisms can be broadened to include job creation and local economic development. For example, South Africa’s Renewable Energy Independent Power Producer Procurement Program (REIPPPP) assigns 70% of the auction score on the bid price, and the remaining 30% is allocated based on socio-economic dimensions including job creation, black ownership and enterprise development. Between 2011 and 2015, the REIPPPP is estimated to have created more than 100 000 direct full-time jobs.

EXPLORE FURTHER

Article: Investment in Renewable Energy, OECD Observer (2017)

Report: For sustainable development and nuclear energy

Report: IEA 2018 Renewables Report, International Energy Agency (2018)