Emerging Markets Clean Energy: Who Is Investing and Where Are The Funds Flowing?

Future energy attracting investment flows

In Part 1 of this series, we looked at how emerging markets (EEM) (VWO) have come to be counted amongst the most attractive economies globally for renewable energy (ICLN) (PBW). Now, let’s take a quick look at investment flows that are aiding the growth of the clean energy segment in these markets.

The Global Commission on the Economy and Climate predicts climate investment opportunities in the emerging markets to hit $23 trillion by 2030. According to the International Renewable Energy Agency, 62% of renewable energy jobs are currently in Asia (AAXJ) (VPL), with 3.6 million jobs accounted for by China alone. China is expected to create about 13 million jobs in the renewable energy sector over the next 4 years. The African continent has already churned out 62,000 jobs in clean energy space, with good future potential.

International agencies such as the USTDA, World Bank, and BRICS Bank have already laid out plans for investment in clean energy projects in emerging markets. Solar power seems to be taking the lead currently.

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USTDA

The US Trade and Development Agency’s (USTDA) Power Africa and the US Africa Clean Energy Finance programs seek to increase access to electricity and support private sector investments in Africa. Under the Power Africa program, the US is aiming to bankroll green energy projects such as geothermal, solar (TAN), wind (FAN), and biomass, all of which are cheaper sources to power lhomes and enterprises in Africa (EZA). Kenya is one of the biggest beneficiaries under the program thus far.

World Bank

The World Bank Group’s Scaling Solar Program is tasks with unlocking private investment in emerging market solar power.  The program is expected to unlock over 1.2GWs of competitively priced utility-scale solar PV in Africa (EZA) in the coming years. Consequently, African countries including Zambia, Senegal, Ethiopia, and Madagascar are expected to be the first beneficiaries of the World Bank’s Solar Program funding.

BRICS Bank

Additionally, there’s the New Development Bank (NDB) aka the BRICS Bank, which is focused on financing sustainable development and infrastructure projects across BRICS economies.

According to the NDB President K.V. Kamath, the BRICS Bank has 23 projects at various stages of preparation from 2017 to 2018, with a total lending amount of $6 billion. 7 of these projects are in Brazil (EWZ), 2 in Russia (RSX), 6 in India (EPI), 5 in China (FXI), and 3 in South Africa (EZA).

In 2016, the bank granted $1.5 billion in loans to seven projects, a majority of which involved clean energy.

In the final part of this series, we’ll take a look at the potential of the African solar market and certain companies that are already cashing in (or are preparing to cash in) on the opportunity.

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