Renewable energy and energy efficiency (RE/EE) holds vast potential to transform people's lives in the developing world. Energy price volatility, supply uncertainties, and environmental concerns are leading many countries to consider renewable energy sources to provide affordable energy services that enhance energy security and reliability.
Scaling up RE/EE demands concerted action on a number of fronts - policy, legal, regulatory, technical, financial, and risk mitigation. Multilateral and government resources alone are inadequate to meet the large investment requirements of scaling up renewable energy services. Therefore, mobilizing private capital is vital for RE/EE in developing countries. Private investors, in turn, need to be provided with risk-adjusted returns from their investments in RE/EE, making them comparable to returns from more traditional energy alternatives.
The World Bank acknowledges that alongside conventional fossil energy sources, RE/EE can make a significant contribution towards helping people attain a marked improvement in their quality of life. In order to increase RE/EE in developing countries, the World Bank also recognizes the vital need to engage the private sector and other commercial partners. In response, a wide array of World Bank Group financial and non-financial instruments supports developing countries' efforts to secure private investments for advancing RE/EE. Among these are conventional lending instruments, equity and quasi-equity, partial risk guarantees, currency, commodity and interest rate risk management, and carbon finance. In addition, the World Bank provides capacity building, policy, legal, and regulatory support.
The World Bank Group has committed more than US$11 billion to renewable energy and energy efficiency in developing countries since 1990. Together, the World Bank and the International Finance Corporation constitute a major financier of solar photovoltaics (PV) in developing countries with projects valued at more than US$600 million, serving about 1.3 million households and public facilities in about 30 countries in Africa, Asia, and Latin America. World Bank Group energy efficiency investments since 1990 amount to US$3.1 billion in about 120 projects in 40 countries with a significant concentration in Europe, Central Asia, and East Asia and Pacific. Building on this experience, there has been increasing support for the implementation of the World Bank Group's Renewable Energy and Energy Efficiency Action Plan - including the target of a 20 percent average annual growth in renewable energy and energy efficiency commitments - and the Clean Energy and Development Investment Framework.