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Developing and emerging economies are only five years behind energy transitions in advanced economies
New research from RMI suggests that renewable energy deployment is growing faster in emerging economies than in advanced economies, with some developing countries overtaking Western counterparts.
The RMI analysis in Powering up the Global South shows that three quarters of developing economies’ energy demand is in the “sweet spot” of change based on their level of fossil fuel imports, income and available renewable resource.
The research finds the developing economies – across Latin America, Africa, South Asia and Southeast Asia – display key traits and trends:
Investment pivot: 87% of power investment is flowing into cleantech in 2024 already. This is up from around 10 years ago.
Exponential renewable growth: Solar and wind generation is rising at an average rate of 23% a year for the past five years. By 2030 they could be adding as much renewable capacity as developed economies.
Cost tipping point: Cost parity has opened the door to faster change with the halving of solar and battery costs in 2023. This means the upfront cost of solar has fallen to the same level as fossil generation – even without counting the cost of supplying the fossil fuels.
Lowest fossil fuel reserves and production per person in the world: Energy security is a key concern for four-fifths of developing nations who lack domestic oil and gas resources, though 70% of the world’s renewable resources sits with developing economies.
Fossil fuel peak: Demand for fossil fuels has already peaked in a third of developing economies, while it’s set to peak in electricity by 2030.
Powering Global South becoming greener bit by bit
As a result, these developing and emerging economies are currently only five years behind the clean energy transition underway across advanced economies in aggregate. Already solar and wind account for 9% of the power mix in the Global South.
Vera Songwe, Co-Chair of the Independent High Level Expert Panel on Climate Finance, says a massive increase in renewable energy, energy efficiency measures and grid infrastructure will be the cornerstone of an energy transition strategy for emerging and developing economies that delivers on both the Paris Agreement and SDGs.
“It’s in everybody’s interest that developing and emerging economies succeed: there is otherwise no viable route to achieving the Paris Agreement.
“We now need to urgently focus on mobilising investment at scale, and crucially making this finance accessible, available and affordable where it is needed most,” said Songwe.
Energy demand per person in the Global South is only 32 GJ a year, which is a fifth of the amount used in the Global North.
41% of people in the Global South live in countries where electricity demand per person is below the global energy minimum of one MWh a year.
While 60% of the world’s population may live in the Global South, this part of the world only has 20% of fossil fuel production and reserves, and oil and gas production is in decline.
But the Global South contains 70% of the world’s renewable energy potential, and half of clean technology minerals.
The renewable resources of the Global South are nearly 400 times larger than their current fossil fuel production.
The revolution has begun
In 2024, 87% of capex on electricity generation will go into clean technologies. Solar and wind generation has been growing for the past five years in the Global South at a rate of 23% a year.
Renewables already supply 9% of electricity, which puts it only five years behind the Global North. Electrification is already at 75% of Global North levels and growing fast.
RMI’s research suggests that one-fifth of the Global South, from Brazil to Morocco and Namibia, from Bangladesh to Egypt and Vietnam, has already overtaken the Global North in terms of the share of solar and wind or electrification.
The halving of solar and battery costs in 2023 means that the up-front cost of solar has fallen to the same level as fossil fuel generation and the purchase cost of electric vehicles is falling to below that of petrol vehicles in many places.
This means that the higher cost of capital in the Global South is no longer a barrier to choosing cleantech over fossil fuel generation.
Cleantech revolution to continue
It is estimated that by 2030 the Global South will have increased its electricity generation from solar and wind by more than four times, to above 2,000TWh a year.
This rapid growth of renewables will provide the foundation of higher levels of electricity supply which will, in turn, drive economic growth.
Fossil fuel demand for electricity will peak by 2030 in the Global South. The remaining areas of demand growth are limited as a result of ongoing electrification and efficiency.
Still, two key areas of the Global South are not yet adopting clean technologies:
Low-income countries (where 6% of energy demand lies), and
Fossil fuel exporters (21% of demand).
But even here RMI does see signs of change, for example in Colombia and Ethiopia.
RMI suggests that drivers of change include:
domestic policy to encourage the adoption of cleantech and attract investment,
global capital directed especially to low income countries, and
technology transfer. |
