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?
Climate Change
“Sink or swim”: WA Gov hugely underestimating decline in regional gas demand while sleeping on green exports, new report finds
PERTH, Tuesday 13 October 2026 — A new report from Greenpeace Australia Pacific and Springmount Advisory reveals green commodity exports are an untapped economic opportunity for Western Australia in a declining Asian gas market, while offering a genuine solution for decarbonising Asia.
From Gas to Green: Building Western Australia’s Future State is a comprehensive analysis of the declining gas market in Asia, and the untapped economic opportunity for WA to become a global leader in green commodity exports while driving the regional shift away from fossil fuels.
The report offers key recommendations for the WA Government to support regional decarbonisation through an orderly phase out of gas exports in favour of green iron and other green exports. It comes as global climate leaders from across business, politics and advocacy prepare to meet for the Global Citizen Now: Perth event focused on decarbonising WA.
Key findings:
- Gas demand is falling across WA’s core markets in Asia: Gas demand fell in 2025 and is projected to continue to decline, driven by a combination of global geopolitical factors and domestic concerns.
- Policy shifts in key markets since the war on Iran now prioritise renewables and nuclear over gas: Japan, South Korea and China have legislated energy plans that prioritise renewables and nuclear over gas.
- New WA gas would arrive in a saturated, uncertain Asian market filled with cheaper gas: The US is now the world’s largest liquefied gas producer and plans to double its capacity as it also targets Asian markets.
- Green commodities offer a real solution to sustain WA’s economy: WA can lead Australia’s green commodity exports, which by 2060 could be worth almost a trillion dollars.
- Exporting more WA gas is likely to delay or impede Asia decarbonisation: Despite claims by the gas industry, there is no evidence that WA gas is displacing coal in Asia, and in fact diverts resources from genuine decarbonisation options.
Geoff Bice, WA Campaign Lead at Greenpeace Australia Pacific said: “As our export partners in Asia shift away from expensive and polluting gas, the WA Government has a golden opportunity to pivot our economy to green exports, like green iron, which is the most effective way to help our region to decarbonise.
“The writing is on the wall: gas is in decline, renewables are our future. In this context, it makes zero sense for the government to encourage high risk projects like Woodside’s reckless Browse gas proposal at Scott Reef.
“This report clearly shows that the WA Government faces a choice: sink or swim. They can either allow the gas industry to keep ripping off West Australians and continue propping up its decline, or choose the path that will deliver enormous benefits to the state and the world by becoming a leader in the rapidly expanding green economy.”
Tom Quinn, Managing Director of Springmount Advisory: “Western Australia prospers when it looks to the future and builds for future demand. Twenty years from now, what the world needs is green commodities made using WAs abundant renewable resources. Just like it did with iron ore in the 1950s and gas in the 1970s, WA should look to the future and build what the world will need, not sunsetting industries like gas that are already past their peak.”
-ENDS-
Media contact
Kate O’Callaghan on 0406 231 892 or kate.ocallaghan@greenpeace.org
Lucy Keller on 0491 135 308 or lucy.keller@greenpeace.org
A report from Greenpeace Australia Pacific and Springmount Advisory reveals the untapped green economic opportunity for Western Australia in a declining Asian gas market, which also offers a genuine solution for decarbonisation in Asia.
Is Western Australia clinging to a fading gas industry while a thriving green future passes it by? As major Asian trading partners rapidly pivot away from volatile gas imports toward cheap solar and battery storage, this report exposes a high-stakes choice: risk becoming stranded in an oversupplied fossil fuel market, or harness WA’s unmatched sun and wind to lead the global clean energy transition.
Summary
From Gas to Green: Building Western Australia’s Future State reveals that Western Australia (WA) faces a critical juncture as falling Asian gas demand, geopolitical gas supply volatility and accelerating renewable energy deployment undermine the long-term economic viability of gas exports. By harnessing its world-class wind and solar resources, the report demonstrates that WA can execute an orderly phase-out of gas and pioneer a green commodity export economy that could generate $987 billion in economic value by 2060, create 24,000 ongoing jobs, and drive a 9.6% reduction in global greenhouse gas emissions.
Key Findings
- Gas demand is falling in Asia – WA can no longer rely on gas exports: Gas demand in core Asian markets fell in 2025 and is projected to continue to decline in 2026. Legislated energy plans in Japan, South Korea, and China now prioritise renewables and nuclear over gas.
- Asia is increasing renewables, importing gas just gets in the way: Evidence from markets like Thailand suggests that gas imports are increasingly crowding out cheaper renewable energy investments and battery storage rather than displacing coal, locking in more emissions over time.
- Green commodities offer a real solution to decarbonise Asia – this is a major win for WA: With world-class renewables, WA can lead Australia’s green commodity exports, which by 2060 could be worth almost a trillion dollars ($987 billion) and support a genuine 9.6% reduction in global emissions.
Recommendations to WA government
Recommendation 1: Plan an orderly gas phase-out aligned with a trading partner pivot plan
Implement a managed, orderly phase-out of gas exports aligned with trading partners’ decarbonisation pathways, rather than waiting for demand to collapse, by:
- Developing and implementing a staged phase-out of gas facilities aligned with feedstock supply expiry or typical end of facility lifespans.
- Committing to no new gas development for gas expansion, including Browse and Kimberley fields.
- Developing new, reciprocal trade relationships with existing gas trade partners, structured to progressively replace gas exports with green commodities – integrated with recommendation 2.
Recommendation 2: Develop an integrated green commodity export strategy, positioning WA as a global green iron manufacturing hub
Establish an integrated green commodity export strategy that immediately prioritises green iron development, positioning WA as a global green iron manufacturing hub, by:
- Committing to green commodity export targets to give industry and investors a clear demand signal.
- Prioritising green iron as the lead sector within the broader green commodity strategy, given WA’s iron ore endowment and first-mover potential.
Recommendation 3: Reject false solutions such as carbon dumping (CCS) and blue hydrogen
Reject carbon dumping (also described as carbon capture and storage, or CCS) and blue hydrogen as viable decarbonisation technologies, and prioritise green hydrogen and proven renewables for clean energy and fuel production by:
- Excluding blue hydrogen projects (and CCS-dependent projects) from all government support programs.
- Requiring existing hydrogen-based production (including ammonia, methanol, synthetic fuels) to have clear, near-term transition timelines to switch to green hydrogen production.
What you can do
Together, we can push for a prosperous green future.
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.
REPORT: “From Gas to Green” Building Western Australia’s Future State
Cleaner cooking projects in the UN carbon market will have to set aside a share of their credits to insure against the risk that the trees they save are lost to fire, drought or logging, after the market’s regulator rejected calls to exempt the sector.
The requirement is part of a new rulebook that the Paris Agreement carbon market regulator – the Article 6.4 Supervisory Body – approved last Friday for programmes that aim to cut emissions by distributing new and cleaner cookstoves in regions that still burn wood or charcoal for cooking.
These are the UN mechanism’s first rulebooks for cookstoves, one of the carbon market’s most popular credit types and also one of its most criticised for overstating climate benefits.
They consist of two methodologies: one for programmes that aim to cut greenhouse gas emissions by distributing more efficient cookstoves that burn less wood or charcoal, and a separate methodology for projects shifting households to lower-emissions cookers running on electricity or liquid petroleum gas (LPG).
Mkhuthazi Steleki, the South African chair of the Supervisory Body, said “this decision gives cleaner cooking projects a new pathway under the UN carbon market, with clear rules to ensure that each credit represents a real and credible emission reduction”.
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Exemption push rejected
More efficient cookstove projects earn credits based on the amount of carbon they save by preserving trees that would have otherwise been cut down and burned for fuel. But if those trees later burn in a wildfire or are logged, the carbon stored would be released anyway, erasing the climate benefits of the credits.
Several carbon credit developers, conservation NGOs and the UN Environment Programme (UNEP) disputed that cookstove projects face this risk, in what critics described as a “coordinated lobbying campaign”.
They argued that, unlike forest protection schemes, this type of credit represents a “flow” of avoided emissions rather than a “stock” of stored carbon that can be released. They also warned that requiring a buffer would impose disproportionate costs and undermine the financial viability of these activities.
But the UN carbon market regulator was not persuaded by the argument. It decided that projects would have to protect against this reversal risk by handing over a percentage of credits to a so-called “buffer pool” instead of selling them.
‘New paradigm’
The amount of credits to be given up is calculated by applying different methods for natural risks, like wildfires, droughts or hurricanes, and human-caused ones, such as logging or land clearing.
For natural risks, project developers will need to apply local risk values derived from new modelling published by a group of independent scientists.
Campaigners have broadly welcomed the decision. Federica Dossi, an expert at Brussels-based advocacy group Carbon Market Watch, said it sets a new paradigm for calculating reversal risk based on empirical data. “This approach is grounded in science and we hope to see this now being adopted by other carbon crediting mechanisms in the voluntary market,” she added.
Backers claim this method is more rigorous than current practice in the voluntary carbon market, which largely relies on expert guesswork.
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Pushback over science
As Climate Home News previously revealed, the same industry and NGO groups that sought an exemption from the “buffer pool”, along with some corporate buyers, criticised the use of a study backed by the UN carbon market’s experts that recommended the new risk assessment approach.
The groups pushed for more flexible rules that would have allowed natural risk values drawn from other sources, including national databases, or from the project developers themselves.
While the Supervisory Body rejected this approach, it gave project developers and countries the option to propose alternative values that would first need to be vetted by the mechanism’s expert panel and then approved by the regulator.
A carbon market expert told Climate Home News that, while it is too early to say how this provision will be used, they expect requests will have to be backed up with solid scientific evidence, lowering the risk of unfounded claims.
Policy discounts questioned
To guard against human-caused risks, projects will need to apply a flat 20% value set by the Supervisory Body, at the bottom of the 20-45% range recommended by its technical experts ahead of last week’s meeting.
That value can be further reduced by up to two-thirds if the host country has an emission-reduction plan covering forests, a long-term climate strategy and a framework for the UN’s REDD+ forest protection scheme.
Injy Johnstone, senior research fellow at the Munich-based Max Planck Institute, said that, while these are important governance measures, their existence does not necessarily demonstrate that the underlying risk of forest carbon loss has been reduced.
“It is important to distinguish between evidence of actual risk reduction and assumptions about the effectiveness of policy commitments,” she added.
Moving target
A UN source told Climate Home News that, under the approved formula, improved cookstove projects must set aside at least 9% of credits linked to saved wood if they operate in the lowest-risk areas and the host country can claim all available discounts. The share of credits rises significantly in regions with high natural risk values, such as Guyana, Sri Lanka and Timor Leste, or that do not have REDD+ programmes.
These factors could change in the future as the Supervisory Body asked its technical experts to recommend revisiting the risk values “should credible new evidence arise”.
Climate change is likely to make forest destruction events, such as wildfires