Summary of key pathways to reduce LMIC electricity emissions
- Expanding and modernizing grids: Meeting growing LMIC electricity demand with clean energy will require substantially more distribution and transmission grid infrastructure because (1) new demand is emerging in areas that local grids have not yet reached, and (2) the best clean electricity generation sites often lie far from centers of demand. Physically building grid infrastructure is capital-intensive and country-specific, but the planning that decides what gets built, and where, is work philanthropy can support at a regional level.
- Operating reliable grids: Unreliable and poorly managed distribution grids raise the risk of LMIC clean electricity projects and push offtakers toward costly backup fossil fuel generation. Philanthropy can provide data, tools, and technical assistance at a regional level to improve how utilities and grid operators function, lowering the risk of clean electricity projects.
- Making projects more accessible to investors: Even where promising projects exist, investors will not enter a new LMIC market without a visible pipeline of bankable projects. Philanthropy can support regional project preparation and aggregation vehicles to develop accessible and investable project pipelines.
We prioritize all three pathways to derisk clean electricity in LMICs, each of which is well-suited to regional and multi-country philanthropic intervention.
Expanding and Modernizing Grids
Meeting growing LMIC electricity demand with clean energy, especially VRE, will require substantially more grid infrastructure for two reasons: new demand will emerge in places the grid has not yet reached, and the best sites for large-scale clean electricity generation are often far from centers of demand.18
LMICs, with the exception of parts of Latin America, have lagged in transmission investment and buildout.19 Between 2016 and 2022, LMICs spent under $200 billion a year on transmission and distribution. Reaching net-zero emissions by 2050 would require over $300 billion per year in additional transmission and distribution investment from 2023 to 2030, rising to roughly $600 billion per year from 2031 to 2050.20 For comparison, from 2023 to 2050, HICs will need $200 billion less per year than LMICs for transmission and distribution.21
While all LMICs need to spend more on transmission and distribution, they are not all starting from the same baseline. LMICs in Asia and Latin America—which are both close to reaching universal electricity access—require grid buildout to meet new sources of demand and connect new projects. Other countries, especially in sub-Saharan Africa, still face large electricity access gaps, meaning they need to build grid infrastructure to interconnect neighboring grids, meet growing demand, and connect communities for the first time.22 Part of that access gap can be closed with clean electricity resources that are off-grid, such as standalone resources and mini-grids.23 Off-grid resources, however, are not a substitute for grid expansion. They remain a very small share of installed clean electricity capacity, and grid extension is more cost-effective compared to mini-grids when distances are shorter or demand is higher, or both.24 While mini-grids will have an important role to play, LMICs will need to expand their grids to decarbonize and meet the large growth in demand.25
While most countries, including high-income countries, struggle to deploy grid infrastructure, the challenges they face are not always the same. Many of the interventions that support grid deployment fall outside the scope of this report because they are targeted at country-specific challenges, such as navigating domestic political environments, mobilizing domestic public financing, and designing and implementing specific policies and regulations.26
Some challenges, however, are shared widely enough that regional interventions can support grid infrastructure development across multiple countries. We think planning is the clearest example. Deciding which infrastructure to build, and where, requires complex modeling to understand how new assets will interact with existing systems. Utilities and national ministries rely on this modeling, including integrated resource planning (IRP) and integrated distribution system planning (IDSP), to decide what to build. Those decisions shape how much clean electricity ends up in an LMIC's generation mix.27
Not all LMICs conduct an IRP/IDSP or extensive high-quality modeling themselves. Many rely on HIC governments and modelers to do this work on their behalf. While the extensive experience HICs offer is helpful, it also means LMICs are not building their own modeling capacity and know-how. As a result, policymakers may not understand or consider modeling results in their decisions.28 Furthermore, the results of foreign modeling may also be less accurate or relevant, since modelers unfamiliar with a given country are more likely to miss local context.29
LMICs that want to build domestic modeling capacity, however, run into further constraints. Models that are widely used to plan grids can be expensive, and LMIC institutions often lack the technical staff to run them.30 Even if planners in LMICs have the data and can run models themselves, models built for LMICs frequently omit country-specific considerations, leaving gaps or inaccuracies in their findings.31 Additionally, the datasets LMICs use are often of poor quality or, in some countries and regions, do not exist at all.32 Even with high-quality datasets, interoperability challenges across different modeling tools can create friction.
To plan and build grids that support clean electricity, LMICs need stronger modeling capacity, better data, and tools they can use themselves.33 Specifically, expanding open-source datasets and modeling tools, and supporting local institutions to adopt them, can improve visibility into the grid and support planning for the infrastructure needed to deploy clean electricity.34 Better planning also lowers investor risk, since a grid planned around clean electricity is less likely to result in stranded or curtailed clean electricity assets. We think philanthropic support at a global and regional scale can strengthen this planning capacity and, in turn, LMICs’ clean electricity deployment.
Operating Reliable Grids
Existing power reliability and grid management issues are a barrier to clean electricity deployment, with most LMICs experiencing a significantly higher level of power disruptions than HICs.35 Specifically, “the average customer in low-income countries faces about 80 additional hours of lost service and roughly 60 more outages per year compared to customers in high- and upper-middle-income countries.”36 Even when LMIC grids deliver power, the quality can be poor enough to damage equipment. Poor power quality can mean inconsistent and excessive voltage fluctuations, power surges, current leaks, and ground faults, to name a few.37 Reliability problems are widespread across LMICs, and outages are longest and most frequent in South Asia, followed by sub-Saharan Africa.38 These figures are self-reported, so the true picture is likely worse.39
We think grid management is a major—albeit tractable—contributor to reliability problems in LMICs, which are constrained by deeper financial and political dynamics. Within that constrained environment, weak processes compound the problem. For example, utilities may negotiate power purchase agreements (PPAs) without transparency, which can result in inefficiency and inflated, uncompetitive returns.40 Capital wasted in this way reduces the capital available to maintain the grid and deliver reliable service.41
We consider other factors outside the direct control of grid operators that lower the reliability of LMIC grids—such as electricity theft and corruption—important, but they are not a key focus of this strategy given they are country-specific issues.42 Some of these challenges, however, can also be addressed by improving grid reliability; as a result, we review them in greater detail below. We focus on established best practices that can improve utility performance and open electricity markets to private participation. We think supporting their adoption is well-suited to philanthropic funding.43
Addressing electricity instability matters for clean electricity deployment because investors treat it as a direct threat to returns. For example, industrial offtakers such as factories and mines, which account for a large share of demand on LMIC grids, cannot operate productively or competitively without a stable electricity supply.44 Unreliable electricity supply also erodes the willingness of industrial and household customers to connect to the grid and pay for electricity, pushing some toward illegal connections, which in turn worsens the problem operators are trying to solve.45 These challenges come even as governments apply pressure to keep electricity rates low to appeal to offtakers and gain political support.
Low rates, however, create a problem of their own.46 Utilities cannot cover their costs when rates are too low, and as a result, cannot invest in the improvements that would otherwise raise service quality.47 Offtakers experiencing continued poor service often turn to costly backup fossil fuel generators to maintain consistent electricity access.48 The cumulative result is an electricity market that struggles to attract investment, and one where emissions may rise as backup generation fills the gap.
While the current state of reliability is already a barrier to investment, rising VRE shares could add to that challenge.49 Over the last 10 years, grid-connected VRE capacity in LMICs grew by 113%, an increase of 940 GW in new capacity, and we expect this rate of growth to continue.50 The challenge is that VRE output fluctuates by definition, and balancing and managing the grid becomes more challenging as operators add more VRE.51 Every country faces different technical barriers to achieving a more reliable and well-managed grid, with some needing more physical investments and maintenance.52 Most LMICs, however, lack good visibility into the state of their own grids, and stand to benefit from digitization and smart metering, which can generate higher-quality data while allowing operators and regulators to spot issues earlier and restore service faster.53
In addition to monitoring, grid operators also require improved tools and models to plan and operate the grid more reliably.54 These tools become even more critical when attempting to implement high levels of VRE.55 As a result, LMICs will need to adopt new and adapt existing tools to bring large volumes of clean electricity onto the grid. Poor data quality, however, has held back adoption of grid management and forecasting models in LMICs.56 Ensuring operators use data properly is the critical next step, and this challenge is not unique to LMICs. Even operators of fully digitized grids are not using the data they collect to maximize impact on their operations.57
As a result, philanthropic funding for data collection is unlikely to improve operations on its own. Philanthropic support must reach the processes and staff that turn data into decisions. As such, we treat tool development and capacity building as complementary approaches.
Developing higher-quality datasets and using better models will ensure grids operate more reliably and allow more clean electricity facilities to connect to the grid. As a result, investors will price LMIC grid risk lower, because a better-run grid reduces the chance that a project is curtailed or that the utility fails to pay for the power it has contracted. We think philanthropy is well-suited to support development and implementation of better tools at a regional level and, in doing so, unlock additional clean electricity financing.
Making Projects More Accessible to Investors
Even where promising projects exist, connecting them with investors is a challenge; without a large, clear, and predictable pipeline of bankable projects, investors are unlikely to enter a new LMIC market.58 Compared to international developers, local developers who have a better understanding of the LMIC regions in which they operate find it more difficult to access foreign sources of capital.59 To lower market-entry risk and increase access to financing, LMICs need a visible pipeline of bankable projects. It is important to note that there are tools focused on the financial sector that can also lower the risk of entering new LMIC markets. We do not cover these tools in this strategy but may explore them in future research.
Developing a clean electricity project and proving it is financially viable takes substantial resources and time. This process, known as project preparation, presents many potential roadblocks: securing early-stage funding, obtaining permits, and finding offtakers and reliable revenue, among others.60 Each stage is an opportunity for the project to fail. To improve the odds, development banks, development finance institutions, and climate funds have established project preparation facilities (PPFs) to support clean electricity projects in LMICs. PPFs offer services that help projects reach bankability, including proof-of-concept and feasibility studies, technical advice, planning support, and introductions to investors.61 While several PPFs already exist, there has been a growing trend of shrinking global development budgets and services, as seen with the recent dismantling of the U.S. Agency for International Development (USAID).62 The resulting gap leaves room for philanthropy to support PPFs. For instance, the Global Energy Alliance for People and Planet has recently begun supporting this kind of work.63 While we see the case for philanthropic support of PPFs, we are less certain whether smaller funders can help fill a gap of this size and have material impacts. As a result, we have decided not to include PPF support as a prioritized sub-strategy.
In addition to PPFs, developers and financiers can build project pipelines by aggregating projects into an investable portfolio or platform. Aggregation is a widely used and effective way to derisk projects and mobilize capital to LMICs.64 Investing in a single project carries more risk because its outcome is essentially binary; it succeeds or fails, and the investor’s return depends on that one outcome. Aggregating projects, however, spreads that risk. Even if one project underperforms, others in the portfolio can offset it, which raises the likelihood of an acceptable overall return.65 The same logic extends beyond generation projects. Many investors are unable or not permitted to invest in foreign energy infrastructure directly, but aggregation vehicles let them invest indirectly.66
These vehicles can also attract more investors to LMIC markets by solving a size problem: investors tend to set minimum investment sizes to keep transaction costs low, which prices out the smaller clean electricity projects common in LMICs. Pooling projects together lets investors make one large investment while still funding smaller-scale projects.67
Aggregating projects is a high-leverage intervention to create clear project pipelines for investors. Private capital is unlikely to support a transparent aggregation structure that communicates its approach and lessons learned because that transparency mainly supports other investors, not the one footing the bill. As a result, we think philanthropy is well-suited to support the development and dissemination of these successful strategies.
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18 “In lower-income economies, electricity demand growth is likely to be the result of connecting many new households and businesses, calling for significant grid expansion.” IEA, 2023
“Many solar PV projects and offshore wind farms are often located far from key demand centres like cities and industrial hubs. Without significant grid expansion, these resources cannot be fully and cost-effectively harnessed.” IEA, 2025(b)
19 “Europe, the United States, China, India, and parts of Latin America are leading the way, and global investment in power transmission grew by 10% in 2023 to reach USD 140 billion. There is a strong regional imbalance in investment patterns, with advanced economies and China accounting for about 80% of the global total.” IEA, 2025(b)
20 Fig. Average annual transmission and distribution investment in EMDEs and advanced economies in the Announced Pledges Scenario and Net Zero Scenario, 2016-2050. In this source IEA uses the term EMDEs which we treat as LMICs. IEA, 2023
21 Fig. Average annual transmission and distribution investment in EMDEs and advanced economies in the Announced Pledges Scenario and Net Zero Scenario, 2016-2050. In this source IEA uses the term advanced economies which we treat as HICs. IEA, 2023
22 “While regions such as developing Asia and Latin America are close to universal access to electricity, substantial gaps persist in many countries in sub-Saharan Africa. This region accounts for around 80% of people without electricity access” IEA, 2025(b)
23 “Achieving universal access to electricity in Africa by 2030 requires a tripling of the current rate of progress, and strongly relies on stand‐alone and mini‐grid systems. Under the NZE Scenario this means reaching about 65 million cumulative household connections to the main grid, with a further 48 million households connected to mini-grid solutions and about 42 million to stand-alone grids.” IEA, 2023
“Most African countries run isolated national grids that are small, costly and unevenly supplied. Regional energy interconnectivity is the key to unlocking efficiency, affordability and renewable growth.” WEF, 2025
24 1)In 2025, only 0.37% of global renewable energy capacity was off-grid. In Africa, which had the highest share of any LMIC region, the figure was 1.6%. Calculations were made using data from IRENA STAT, 2026 and calculations can be found here.
2) cost effectiveness of grid connections vs mini-grids were sourced from Figure 2.10 Distance as a function of load size: Break-even grid extension. ESMAP, 2022
25 It is important to note that mini-grids can range in size, and at times can even scale up to multiple MW of generation capacity. As a result, there are occasions and geographies where a mini-grid may make sense to meet a large source of demand, especially when it is built to be connected with the grid in the future. Despite this, we do not believe that mini grids will be the best solution across LMICs globally.
26 Fig Key policy recommendations to boost grid capacity development. IEA, 2023
27 “The IRP process typically begins with setting clear objectives that reflect the priorities of a particular country, region or local jurisdiction — such as increasing renewable energy, reducing costs or improving energy access. Planners forecast future energy demand, evaluate resource options and use modeling tools to develop and compare scenarios.” WRI, 2026
“An Integrated Distribution System Planning (IDSP) process provides a decision framework for developing holistic infrastructure investment strategies for local electricity grids. The planning process involves the determination of grid system requirements that are needed to achieve reliability, resilience, safety, affordability, and other objectives. The process includes the development of a technology roadmap to modernize the grid and enable the integration, utilization, and orchestration of grid-edge technologies like storage, microgrids, and electric vehicles.” DOE, 2026
28 “Many LMICs lack capacity to draw on energy modelling for decision-making due to, for example, limited human and financial resources. A longstanding concern in policymaking has been a lack of institutional capacity to use and engage with energy modelling. It is often the case that modellers from HICs lead or support modelling projects in LMICs, given their comparatively longer experience.” Fuchs et al., 2024
29 “Other participants [...] also cautioned that external modellers often lacked specific contextual knowledge to use appropriate assumptions and data, as well as navigate stakeholder expectations. To address this, participants emphasised the importance of involving local experts in the modelling process in order to enhance the credibility of inputs and outputs, particularly for policymakers.” Fuchs et al., 2024
30 “While simulation tools have gained prominence in providing transition insights to modelling the energy paradigm of developed countries, their developing country counterparts have yet to gain a clear transition pathway. This could be due to the cost of commercial tools, technical know-how, and the complex attributes and under development of developing countries’ energy systems transition paradigm.” Shari et al., 2025
31 “Despite the fact that some EPMs have been widely adopted for energy system planning in developing countries, they lack consideration of a substantial number of issues affecting developing contexts; e.g. the effects of a lack of innovation, and the varying nature of privatisation, decentralisation and competition in the energy industry.” Debnath & Mourshed, 2018
32 “Generally, a lack of high-quality, accurate data is a critical obstacle in designing modelling approaches, especially in LMICs. This imbalance in data availability represents a risk of perpetuating injustices and inequalities in energy planning” & “Participants were critical of external modellers who build models based on inappropriate data and which therefore failed to reflect local realities: ‘One major problem we also have in Africa is the lack of data.’” Fuchs et al., 2024
33 “We present an expanded set of energy planning considerations and related modelling methodologies that can better capture the diverse risks LMICs often contend with when building energy systems in contemporary conditions. We propose three ways of taking this forward – i) focusing on making data and modelling available, based on open science principles; ii) prioritising context-specific support for modelling in countries with lower planning capacity; and iii) developing and expanding networks of practice that support LMIC modelling practitioners.” Daly et al., 2026
34 “Multiple entities have made progress in recent years in improving asset and system visibility through diverse platforms. [...] Much greater granularity is required for spatial analysis to identify weaknesses and improve stability. Open-source data sets and tools can support electricity access planning and help to target loss-reduction measures.” IEA, 2024(a)
35 “Overall outages for end users, commonly reported using the System Average Interruption Duration Index (SAIDI) in annual outage hours per customer, show huge variations in supply reliability. Customers in high-outage EMDEs such as Iraq and Papua New Guinea experience around 40 times the average outage levels of most other EMDEs, which in turn are still around three times the interruptions of India and the United States and around fifteen times China and
36 World Bank, 2026 p.7
37 “In some recently electrified areas, voltage often falls more than 20% below standard levels during peak demand, leaving households and businesses vulnerable to equipment damage and disconnections.” Phillips et al., 2025
Power quality is defined as “ the delivery of clean and stable energy, measured in consistent voltage and current sinusoidal waveforms from the utility to the consumer. The traditional grid with large central power stations and transmission and distribution networks is a very complex system, which make it extremely difficult to ensure the delivery of quality power to the end users.” NREL, 2021
38 “South Asia stands out as the region with the most prolonged and most frequent outages, followed by SubSaharan Africa. In contrast, utilities in the other regions cluster at much lower and relatively similar levels of outage duration and frequency.” World Bank, 2026
39 “SAIDI and SAIFI indicators are self-reported by utilities and likely to suffer from measurement errors [...], and potentially, from reporting errors. [...] Misreporting may be systematically correlated with institutional quality. The direction of bias induced by misreporting is likely to be downwards (the data would be less likely to reveal greater outages in countries with weak control of corruption), as utilities may be more likely to misreport (under report outages) in contexts of weak control of corruption.” World Bank, 2026
40 PPAs are long-term contracts that utilities use to purchase a certain amount of electricity for a set price from a generator.
41 “Ghana’s expansion of generation capacity to respond to severe power shortages and extended blackouts during 2011-16 shows that Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs) were conducted through nontransparent, non-competitive processes. Reliability remained a problem even in the presence of excess generation capacity because of weak integration with and planning of the power system.” World Bank, 2026
42 “Another channel through which weak institutions can affect utility performance and the reliability of electricity supply is through more widespread corruption in society, often in collusion with frontline utility staff.” World Bank, 2026
43 “Duration and frequency of outages are lower among privately owned utilities, and, regardless of ownership, in countries when there is stronger control of corruption.” Additional best practice interventions are described between pages 28 and 38. World Bank, 2026
44 “power outages negatively and significantly affect firm-level revenue-based total factor productivity, with a 9 percent lower unconditional average productivity for exposed firms compared to nonexposed firms." World Bank, 2023
45 “Over half of utilities in LICs and LMICs have outstanding customer payments (receivables) equivalent to more than 150 days of revenue, compared to only 20 percent of utilities in UMICs and HICs. Delayed or inconsistent payments for electricity by public sector customers, such as government offices, publicly owned mines, or water utilities, often make up a disproportionate share of receivables.“ & “Poor collection performance, especially by distribution utilities, is often felt across the power sector because poor collection means that less cash is available to pay upstream generation and transmission utilities.” World Bank, 2024(a)
“The relationship between payment and supply is completely broken: customers no longer see a reason to pay their bills because power is unreliable or intermittent, and utilities no longer see customers as essential for revenue (they rely on government bailouts).” World Bank, 2026
46 “Political pressure to provide subsidized or free power to certain groups of consumers (e.g. agriculture sector) also undermine the cost recovery effort.” World Bank, 2020
47 “chronic poor financial performance of electricity utilities is pervasive in the developing world—resulting from underpricing, excessive losses, and bill collection failure—and has for decades been a main driver of investment shortfalls, under-maintenance of infrastructure, power shortages, poor quality of supply.” World Bank, 2020
“Utilities that do not recover costs present greater risks to investors, will face higher financing costs, and will struggle to attract financing at the scale required to achieve the energy transition and universal access.” World Bank, 2024(a)
48 IFC, 2019
49 “Clean energy gains risk becoming a source of fragility rather than resilience.” Phillips et al., 2025
50 We utilized IRENA, 2026 data from 2015 and 2025. Calculations of LMIC data, using the World Bank LMIC country determinations, can be found here.
51 The level of challenge will also depend on how the grid is designed, as discussed in the previous pathway. Systems designed for VRE and clean electricity will be more capable of absorbing some of the risks. “The VRE integration challenges for grid operators and planners stem from both the inherent characteristics of VRE resources (i.e. variable with limited predictability; site-specific) and the characteristics of the system into which they need to be integrated.” ESMAP, 2019(a)
52 “In low-income countries, reliability may be just one of many fundamental constraints across the power sector, alongside generation adequacy, transmission bottlenecks, and underfunded maintenance. Underinvestment may span generation, transmission, and distribution alike, though the relative neglect of grid moderniza-tion and reliability is especially acute. Middle-income countries, by contrast, often face more specific grid modernization challenges—such as integrating variable renewables, managing urban load growth, or upgrading aging distribution networks—where incentive mechanisms may be more readily applied.” Phillips et al., 2025
53 “Smart grid technologies such as advanced metering infrastructure (AMI), smart meters, and remote sensors enable real-time monitoring, faster fault detection, and quicker restoration of service”; “Smart meters are perhaps the most powerful tool in this growing suite of technologies because of their integration with [advanced metering infrastructure (AMI)], which serves as the connective layer between centralized data tools and more decentralized data sources.” Phillips et al., 2025
54 “High-resolution real-time and advanced meteorological forecasts are also important for accurate generation and consumption forecasting, as well as assessing vulnerabilities to extreme weather and preparing for the associated risks” & “Due to the variable nature of wind and solar PV generation, improved forecasting can support the secure and efficient operation of the power system and minimise the need for balancing actions.” IEA, 2024(c)
55 “The fast penetration of renewable energy, and especially, a high level of their penetration into the power grid requires an adapted power system planning, better forecasting methods, introduces challenges in grid management, imposes stringent requirements for VRE integration into the grid, and necessitates standardization and structured process for the conducting studies to ensure compliance with the gridcode requirements.” ESMAP, 2019(b)
56 “Region-specific and economically-aware forecasting models are indispensable to understanding these localized challenges and optimizing deployment strategies across diverse economic systems. These cross-regional effects, however, hinge on data quality and reporting consistency, which vary widely across developing regions.” & “in developing countries, RE forecasts are often constrained by low data quality, measurement gaps, and irregular reporting practices.” Sariman & Kecebas, 2026
57 “A survey of 10 Transmission system operators(TSO) shows that most agree their control rooms do not make full use of data analytic applications, even when they have fully digitalised grids equipped with sensors and remote control. The energy system is collecting more data than ever, but too much of it remains idle, or stuck in siloed storage, with significant untapped potential." IEA, 2024(a)
58 “Another prominent barrier to increased investment in these markets is buildout a pipeline of large, predictable and bankable projects, which are a critical signal to attract investors, especially large and international ones who generally enter markets only if there is enough preparation expected growth to cover for the transaction costs.” IEA, 2024(b)
59 “local developers can find it more difficult to access finance from international sources relative to international developers. Therefore, increasing the availability of finance from local institutions could help to stimulate more investment from local developers, which also makes use of local financial advisors and lawyers and therefore could help to reduce the costs involved in renewables projects.” AfDB, 2020
60 “The key challenges include obtaining sufficient financing for each stage buildout, securing appropriate legal or financial advice, addressing environmental and social considerations, dealing with unforeseen policy or regulatory changes, and adjusting course if a key donor or partner withdraws support. It is also important to ensure reliable revenue streams for clean energy projects relative to alternatives.” ODI, 2016
61 “project preparation support may include a range of elements including the provision of technical advice for design and conceptualisation, funding for prefeasibility studies and project identification, matching functions aimed at linking projects with funding from other sources and investors, plus other supporting functions.”ODI, 2016
62 “The recent cuts to US foreign aid have left a huge gap in global development finance, disrupting development programs in low- and middle-income countries. Many are looking to Europe, China, and the private sector, but they are unlikely to entirely fill the void.” MSC, 2025
63 “The Global Energy Alliance for People and Planet (GEAPP) is one such example, supporting early-stage renewables projects through grants and concessional financing that bridge the gap between project conception and financial close.” IRENA, 2025
64 “While de-risking can occur at the project level, portfolio solutions are widely recognized as the most effective solution to mobilize capital in EMDEs. The diversification they offer significantly enhances risk mitigation, providing robust strategies to address various types of risks.” WEF, 2024
65 “Some other important impediments include unattractive risk-return profiles in unproven markets and lack of scalable quality projects. This suggests that pooling projects through structured financial instruments could help in some cases. Pooling several projects in a structured fund and creating ABS-type instruments would attract more institutional investors and large investment funds into less developed economies, which may not even have an investment grade, as well as diversify risks. This would raise global climate financial flows and bring them closer to required levels.” Prasad et al., 2022
66 “Infrastructure investment trusts (InvITs) offer another example of an innovative instrument. These are pooled investment vehicles regulated by the Securities and Exchange Board of India that give investors exposure to infrastructure assets. The main goal of InvITs is to promote India’s infrastructure sector by encouraging individuals or institutions to invest in assets that they would not otherwise have direct access to. [...] There are a number of variations worldwide that aim to achieve the same objective: attracting investors to operating infrastructure assets and allowing developers to free up capital to continue developing new ones.” IEA & IFC, 2023
67 “Project aggregation platforms and securitisation vehicles can overcome the asymmetry between the relatively small size of most energy transition projects in EMDEs and the relatively large minimum investment size that major institutional investors require. These platforms can pool large numbers of smaller projects and thereby create standardised investment-grade multi-asset portfolios, reducing transaction costs, diversifying risk and attracting interest from institutional investors.” IEA & IFC, 2023
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