- Formal negotiations
- Finance
- Global review
- Global report
- Digital sequence information
- Harmful subsidies
- Marine biodiversity
- Planning, monitoring, reporting and review
- Article 8(j) implementation
- Biodiversity and climate change
- Links with other bodies
- Around the COP
- Armenian presidency
- Protests
- Lobbying and influence
- Carbon and biodiversity markets
Neshwin Rodrigues and Duttatreya Das are energy analysts at Ember
High cost of capital is a major barrier to the rollout of renewable energy across the Global South. The Alliance of Small Island States has highlighted this repeatedly, and last year the International Energy Agency (IEA) concluded that across a range of developing and emerging economies, raising capital to build utility-scale solar projects costs twice as much as in the Global North.
Capital costs more when investors perceive risks to be higher: the riskier the investment, the bigger return they demand. So the key to making renewable energy investment cheaper is to reduce the perceived risks.
But to reduce them, we must first understand them.
A league table for decision-makers
At Ember, we have developed what we believe to be the first model-based approach that quantitatively assesses the importance of various factors affecting a solar energy project’s overall risk.
As an example, in many countries the time it will take to get your solar farm connected to the grid is uncertain. This means missing out on revenue and presenting a clear risk to investors. We calculate the importance of this uncertainty relative to other risk factors. In this way we can build a ‘league table’ of factors that raise the cost of capital, giving policymakers the information they need to tackle the biggest first and bring costs down effectively.
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We can also show investors where they are being too risk-averse for their own good, encouraging them to worry less and loosen the purse-strings a little.
In the report that we publish today, we focus on India. But, in principle, our approach could be used in any country in the Global South where enough data is available to calibrate the model.
The Indian case is especially interesting at the moment because in 2023 the government introduced tenders for Firm and Dispatchable Renewable Energy (FDRE) generating capacity which require generators to supply electricity in non-solar hours. This can be approached by adding technologies like wind generation and battery storage.
Range of uncertainties
Among the risks that Indian utility-scale solar investments face, we show that the biggest is exposure to market price volatility for FDRE projects.
Electricity prices have become a lot more volatile since 2020, with events such as the Covid-19 pandemic contributing alongside more variable weather and changes to the electricity system and markets. This, we estimate, can reduce a facility’s overall revenue by 7-13%, sending a clear risk signal to investors.
Second in our league table come the penalty payments that FDRE projects face if they fail to provide power when they are contracted to.
Next come delays in commissioning solar farms (due to issues such as grid connection queues), and then the perception that solar panels may perform less well than they’re claimed to. Uncertainties in the future cost of batteries, and the risk of other penalty payments, sit at the bottom end of the table.
Cost escalation, delayed benefits
In principle, we calculate that a solar farm in India would see investors needing up to a 4% higher return on investment to offset the risks associated with FDRE and project delays.
Leaving these risks unaddressed would have major consequences. Renewables and batteries would be deployed more slowly, delaying the benefits of clean energy for citizens. It would keep energy bills higher than necessary, given that the cost of capital accounts for about half of the price of renewable energy in India (and many other developing countries).
And it would exacerbate climate change. India’s target is to build 500 GW of renewable energy capacity by 2030. We find that adding four percentage points to the cost of capital would likely mean falling short by 100 GW, entailing more use of coal.
Taking action
The good news is that understanding these numbers makes life much easier for policymakers.
For example, Contracts for Difference (CfDs) are used in other countries, offering a long-term agreement that guarantees a price for renewable electricity, which lowers the exposure of renewable developments to market volatility, and could be used in India too.
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Commissioning delays can be addressed by, for example, increasing the number of solar parks where grid connections are pre-built, offering generators a ‘plug and play’ facility.
Concern over solar panel performance shortfalls can be addressed by enhancing product testing and by encouraging Indian manufacturers to adopt advanced designs.
During our analysis, we discovered that investors are over-estimating some risks, notably that solar farms produce less electricity than forecast. A full 75% are generating above prediction – a fact which should help make investors a little less risk-averse without any policy intervention needed.
Concepts into costs
The approach that we developed has been around in conceptual form for at least a decade. But now we have turned concepts into cost elevations.
This approach does not address macroscopic factors affecting the cost of capital, such as a country’s credit rating. But it can contribute to a meaningful reduction in other factors, making renewables development faster and cheaper.
We look forward to exploring the application of our methodology in other countries of the Global South, and helping their citizens realise the full benefits of the clean energy transition as soon as possible.
The post Can a different approach to risk accelerate the energy transition in the Global South? appeared first on Climate Home News.
Can a different approach to risk accelerate the energy transition in the Global South?
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Prepared by a coalition of nine Western Australian union, industry, conservation, and community organisations—including UnionsWA, the Conservation Council WA, and the Smart Energy Council—the WA Clean Energy, Jobs & Industry Plan provides a practical roadmap to transform Western Australia into a clean energy powerhouse while creating thousands of secure local jobs.
Western Australia stands at a pivotal crossroads: lead the global clean energy economy or watch investment, future industries, and secure jobs go elsewhere. The WA Clean Energy, Jobs & Industry Plan outlines a transformative blueprint to harness the state’s world-class solar and wind resources. Discover how legislated renewable targets, green iron manufacturing, and a dedicated regional training strategy can generate tens of thousands of local jobs, lower household bills, and build a resilient, net-zero future for all Western Australians.
WA needs a clear and forward-thinking plan if it is going to become a competitive renewable energy powerhouse and maintain its economic strength through the energy transition.
“Western Australians know a faster renewable energy transition will lower their household expenses and prevent harmful climate pollution. But the community also needs clear direction to ensure this transition will create jobs, lower costs and not cause undue environmental harm.
“Here, sectors representing a broad range of interests have laid the groundwork for those outcomes, clearly outlining what is needed to create a future for WA that is good for the environment, for the climate, for workers and for the economy.
Summary
The WA Clean Energy, Jobs & Industry Plan sets out a strategic roadmap to position Western Australia as a global clean energy superpower while creating thousands of secure local jobs.
The report establishes three overarching goals:
- Creating local employment.
- Maintaining industrial competitiveness.
- Lowering household energy costs
To realize this vision, the framework details actionable measures to follow on from the recent WA Government announcement of a 75% Renewable Energy Target by 2031 for the South West Interconnected System. This includes developing a statewide Renewable Energy Target, coordinating statewide workforce and training pipelines, strategically planning regional infrastructure to safeguard high-value biodiversity and cultural heritage, and ensuring equitable benefit-sharing through household electrification incentives and First Nations equity partnerships. Ultimately, the plan highlights that establishing clear policy and regulatory certainty will unlock lower energy bills, boost power reliability, and secure the state’s global competitiveness in emerging green commodity export markets.
Key Findings
- Statewide Renewable Energy Target and Emissions Reduction Targets: The report calls for a statewide RET and 1.5°C aligned emission reduction targets to remove policy risk, lower capital costs, and attract clean energy investment.
- Transformative Job Creation: Accelerating the transition offers massive employment prospects, including up to 8,800 solar and battery jobs by 2050, as well as 24,000 ongoing and 11,000 construction jobs in a commercial green iron industry.
- Industrial Electrification & Competitiveness: Requiring large gas users to adopt binding electrification timetables and providing concessional financing will protect existing energy-intensive manufacturers from rising energy costs and impending domestic gas shortfalls.
- Green Commodity Export Leadership: Western Australia can build new export markets in green iron, green ammonia, and offshore oil/gas decommissioning by constructing shared common-user infrastructure and setting dedicated Green Commodity Export Targets.
- Coordinated Workforce & Training Pipeline: To address critical skill shortages the plan recommends establishing a WA Clean Energy Jobs Plan 2050, three regional training hubs, and dedicated pathways for female and under-represented apprentices.
- Environmental Safeguards & Community Benefits: Fast-tracked development must be paired with State Planning Policies that avoid high-biodiversity and cultural heritage lands, mandate new data centres to run on additional renewable power, and deliver household electrification rebates and First Nations equity partnerships.
What you can do
WA has an opportunity to lead on sustainable, clean energy and associated industries. You can help by:
- Sending an email to Environment Minister Murray Watt and Prime Minister Anthony Albanese, calling on them to reject Browse.
- Sharing this story to help more Australians understand what’s at stake.
- Encouraging your friends and family to take action.
Countries have completed the first “global review” of their progress towards reversing nature loss by 2030 at the COP17 biodiversity talks in Yerevan, Armenia.
The review “notes with deep concern” that, unless action is “rapidly accelerated”, the goal to reverse nature loss and meet a set of 23 targets by 2030 “will not be achieved”.
It “urges” countries to accelerate action, including by “increased ambition in addressing the gaps”.
Much of the discussions in Yerevan focused on how to raise the necessary funds to help developing countries protect nature.
Some major economies pushed to expand the range of nations that are expected to provide finance, with countries agreeing at the end of the two weeks of talks that non-donors that want to contribute can “signal interest” before COP18.
This came after developed countries failed to meet a target to significantly ramp up nature finance over the last few years.
It also came as a landmark fund agreed at COP16 in Colombia to pay communities for the genetic resources derived from nature stands nearly empty two years on.
The Yerevan talks marked the halfway point of the “Kunming-Montreal Global Biodiversity Framework” (GBF), the “Paris Agreement for nature” first made in 2022 and due to be achieved by 2030.
During the nearly 12-hour-long final plenary, countries voted for Quito, Ecuador, to host the COP18 nature talks, which will be held in 2028.
Countries managed to sign off on all the major negotiation texts, marking a stark contrast to COP16, which ran so far over time that the Colombian presidency lost “quorum”, forcing talks to resume in Rome months later.
Below, Carbon Brief has detailed analysis of all of the key outcomes from COP17.
Formal negotiations
Finance
Finance, predictably, was at the heart of the discord and deadlock at the Yerevan talks.
At COP17, discussions on finance had to achieve several outcomes.
The first part – to take stock of biodiversity finance mobilised so far to meet the nature deal’s goals – fell under the global review.
As the global report noted, developed countries failed to meet their commitments to raise “at least $20bn a year by 2025” for nature. Delegates pointed to falling aid levels and a sharp 27% decline in environmental funding for the 2026-30 period.
The second part was to agree on how to mobilise resources for the next four years, to meet the GBF’s goals and targets.
Calls to “broaden the contributor base” of who pays to protect nature – and whether that should include emerging economies – became the most fraught element of the talks.
Eventually, countries agreed on what Switzerland described as a “super, mega-delicate” text. It hinged on major “political compromises”, with “no major winner or loser”, according to Kenya.
Per the decision, countries that want to be included on a list of developed country donors can “signal interest” through bilateral, confidential consultations before COP18 and every alternate COP after.
Finally, countries also agreed on criteria to shape and resource a new, permanent financial mechanism to protect nature after 2030.
However, this did not immediately take the form of a new fund under the COP that biodiverse countries have demanded since 2022, deferring the mechanism’s institutional structure to COP18.
Resource mobilisation discussions at the GBF’s halfway mark were supposed to agree on how to close the “biodiversity finance gap” and to “increase resources from all sources” to “at least” $200bn per year by 2030, as set out in target 19 of the GBF.
The talks were largely dominated by a push, led by the JUSCANZ bloc of developed countries, to “broaden the contributor base”. This could see emerging economies, such as Qatar, China, Saudi Arabia and India, being added to the list of countries that pay to protect nature.