BAKU, Azerbaijan, Sept.27
By Leman Zeynalova – Trend:
Achieving full electricity and clean cooking access by 2030 requires around USD 43 billion a year – only about 2 percent of the annual energy sector investment of the past five years, Trend reports with reference to the International Energy Agency (IEA).
IEA notes that the Covid-19 pandemic has both decreased the flow of new investments and increased the cost of capital in developing economies.
“Our analysis last year found that in the first half of 2020, sovereign risks perceived by investors (i.e. the premium on top of the long-term cost of borrowing) rose by two percentage points from end-2019, reaching 7%. While these premiums have narrowed since the early phases of the pandemic, financing energy projects in developing economies remains up to seven times more expensive than in Europe or the United States,” reads the agency’s report.
IEA believes that international support is needed to accelerate investment and overcome these financing barriers.
“Concessional and blended finance structures could play a role in closing the gap, but so too would increased policy action by local governments. As of 2020, more than 40 percent of sub-Saharan Africa and developing Asia countries have not yet set an electricity access target, and even more have no provisions for clean cooking. The lack of strong regulatory frameworks has a clear impact on their access to financing.
Setting national plans with clear and monitored targets, and creating institutions to fulfil those objectives, are important first steps. Holistic national access plans that consider other sustainable development goals as well as climate mitigation and adaptation needs, can combine the many priorities in developing countries. The need for action becomes more urgent each year that progress stalls or slows down, making it even harder to realize the goal of universal access in 2030. The world must maintain its focus on achieving access for all, and international support is more critical than ever as progress continues to deteriorate in the wake of the pandemic.”
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