Utility-Scale Wind and Solar in Emerging Markets

De-risking private sector investment in emerging markets will facilitate scaling up deployment of renewable energy to meet climate, air quality, energy access, and energy security goals.

This primer summarizes the results of a research effort to better understand the barriers and opportunities for private sector engagement in emerging clean energy markets. It is intended to provide a perspective on private sector needs and constraints, and insight on ways to strengthen the impact that enabling environment support and reform has on clean energy investment in developing countries.

Establishing stable and transparent policy and regulatory frameworks, strengthening technical capabilities, and improving access to early-stage finance could enable greater investment in utility-scale renewable energy projects. Supporting regulatory frameworks and improving the capacity of policymakers and planners to use analysis-based and data-driven decision-making can help to de-risking private sector investment in developing markets.

The following policy and technical support solutions could help remove barriers to private sector investment in emerging markets. These solutions could be implemented by policymakers or supported by members of the donor community:

• Establishing transparent interconnection standards that outline parameters, procedures, and timeline for grid connection;
• Developing template documents that meet international standards, including enforceable contracts, and well designed auctions and Power Purchase Agreements (PPA) that lower risk and facilitate high-quality competition and low prices in emerging markets;
• Strengthening technical capabilities for policymakers, utilities, regulators, laborers, and financial institutions to hasten and improve project development processes;
• Supporting pre-PPA due diligence and project development with access to grants and concessional loans;
• Ensuring investor confidence with government-backed sovereign guarantees specified in U.S. dollars;
• Promoting peer learning, sharing of best practices, modeling and software design support, study tours, and utility exchanges to learn from other utilities and decision makers.