Clean energy: Global investments surpass $3 trillion, but emerging countries lag behind. The IEA launches an Observatory on the Cost of Capital.
In 2024, global investment in the energy sector surpassed the record threshold of $3 trillion . However, only about 25% of these funds went to emerging market and developing economies (EMDEs) , excluding China. In real terms, this represents a decline compared to the previous decade. The main obstacle? The high cost of capital , fueled by perceived or real risks that are curbing the flow of funds into the most fragile markets.
To address the data gap and stimulate clean energy investments in EMDE countries, the International Energy Agency (IEA) launched the Cost of Capital Observatory in 2022. This platform collects empirical data on financing conditions for energy projects in risky markets. The observatory, updated for the third time in 2024, has expanded its technological and geographical coverage, including over 1,700 projects financed or developed globally.
Among the most significant innovations of the 2024 edition: the inclusion of hydroelectric projects – the most widespread source of renewable energy in the world – and the extension of monitoring to Southeast Asia , a region expected to cover 25% of the growth in global energy demand by 2035 .
The Observatory's data reveal a clear gap: the cost of capital for renewables and battery projects in EMDE countries is at least double that required in advanced economies. Variations depend on factors such as local interest rates and national regulations , but the overall trend shows an increase compared to 2023.
Another key finding concerns utility-scale battery projects , increasingly co-located with solar or wind farms . According to data from projects approved between 2021 and 2024, battery prices have fallen by more than two-thirds in ten years , thanks to technological innovation and production scale .
The integration of storage and solar allows to reduce production variability and cover evening peaks in demand , improving grid reliability and supporting the global energy transition .
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