Energy

Energy is at the heart of development.  Energy makes possible the investments, innovations, and new industries that are the engines of jobs, inclusive growth, and shared prosperity for entire economies.

Yet nearly 675 million people still live without electricity worldwide. About 2.3 billion people cook or heat their homes with polluting fuels that harm their health and the environment.

Energy Shocks Are Hitting the Poor the Hardest

Since the first half of 2022, the world has witnessed one of the largest shocks to global energy markets in decades. The COVID-19 pandemic and the war in Ukraine made energy prices more volatile,  exacerbating energy shortages and energy security concerns, and further slowing progress toward universal access to affordable, reliable, sustainable, and modern energy by 2030– Sustainable Development Goal (SDG) 7.

Energy price shocks impact most countries, but developing countries face the highest burdens, especially energy-importing countries. They have limited capacity to mitigate energy price volatility, leading to energy rationing in some countries and growing poverty.

Renewables Are the Key to Green, Secure, Affordable Energy

Renewable energy can help countries mitigate climate change, build resilience to volatile prices, and lower energy costs—this is especially critical now as spiking fossil fuel costs are debilitating poor energy-importing countries. 

Solar and wind technologies can become a game changer for many developing countries as solar and wind are abundant, cost-competitive, and a source of reliable power when combined with battery storage. Hydropower also provides clean, renewable energy that is one of the lowest-cost sources of electricity for consumers. 

For example, the cost of electricity generated by solar mini-grids has gone down from $0.55/kWh in 2018 to $0.38/kWh today. Modern solar mini-grids bring energy to remote populations not connected to the electricity grid, providing enough electricity for life-changing electric equipment—for medical equipment in hospitals; for pumping clean water in farming communities—becoming the least-cost way to bring reliable and clean electricity to remote communities. Estimates show that connecting 490 million people to solar mini-grids could cut 1.2 billion tonnes of CO₂ emissions.

Financing the Energy Transition

Energy consumption accounts for more than three-quarters of greenhouse gas emissions. Financing the massive deployment of renewable energy and energy efficiency, while gradually retiring fossil fuels is critical to addressing climate change and providing the essential energy services that are the backbone of our economies.

While global clean energy investment is picking up, investments in low- and middle-income countries remain at or below 2015 levels. To achieve net-zero emissions by 2050, investments in the energy sector in developing countries need to quadruple to $1 trillion in 2030, including a dramatic acceleration of solar, onshore wind, and offshore wind investments

But in developing countries, constrained fiscal space and lack of access to finance make the costly upfront investments in renewable energy unaffordable. In addition, macroeconomic and political uncertainties discourage private-sector investors from supporting renewable energy.

Last Updated: Jun 06, 2023

The World Bank focuses on tackling the next frontier in energy access and reaching poor and vulnerable populations, particularly in countries characterized by fragility, conflict, and violence (FCV). We have more than doubled our annual financing for energy access from over $400 million in FY13-15 to over 1 billion in FY19-22. In FY18-22, the World Bank connected or improved the connection to electricity for about 77 million people and committed $5.7 billion to further direct energy access programs, mainly in Africa.

In our support to developing countries, we prioritize efforts to boost renewable energy generation. In the last five years, 90 percent of our total power generation lending went to renewable energy, . In FY18-22, around 7.6 GW of renewable energy generation capacity was constructed or rehabilitated through World Bank operations. Over the same period, we helped 28 million people get access to cleaner, more efficient cooking, and heating.

The World Bank is committed to accelerating a "just" energy transition that protects people, communities, and the environment.

Scaling Up Clean Energy to Phase Down Fossil Fuels 

The World Bank has outlined a vision for how the international community can support developing countries to overcome the critical barriers that are paralyzing the power sector transition.  This new framework for energy transition, “Scaling Up to Phase Down”, serves as a roadmap to catalyze financing and sustain a virtuous cycle that unleashes urgently needed investment in power sector transition.

The Scaling Up to Phase Down approach intends to be a bridge between the challenges facing developing countries seeking to transition their power sectors and the partners supporting their efforts.

The energy transition is distilled into six-steps – a “virtuous cycle” – that are foundational for overcoming barriers to clean energy. The cycle starts with government leadership, which is translated to a supportive regulatory environment, increasingly capable institutions, and instruments to minimize risks, followed by transparent and competitive project allocation, which can deliver clean energy that serves urgent needs, including energy security, energy affordability, and jobs. 

Supporting a Just Transition Away from Coal

Transitioning the highest emitting countries away from fossil fuels, particularly coal—the world's most dominant and most carbon-intensive source of energy—is crucial to ensuring a clean energy future.

The World Bank has decades of experience supporting countries where coal mines and power plants are closing, wherever they are in the transition process. Since 1995, we have provided more than $3 billion to support coal transitions. We prioritize early engagement with communities, helping build stronger local and regional institutions, robust social protection plans, and advanced planning to repurpose coal lands and assets and develop renewables to take their place.

Ramping up support to reduce methane emissions

Methane has an outsized and growing impact on near-term climate change, with 80 times the warming power of CO2 in the first 20 years after emissions. Methane emissions are also increasing at the fastest rate ever, with emissions 15% higher in 2021 than in 1984-2006.

Through the Global Gas Flaring Reduction Partnership (GGFR), the Bank works with governments and companies to end routine gas flaring and venting, which releases methane at oil production sites. The Bank addresses technical, regulatory, and financial barriers to flaring and venting reduction, develops country-specific flaring/venting reduction programs, and produces research to support governments. Since 2003, GGFR has worked to reduce flaring and methane emissions worldwide.

IFC, the Bank Group's private sector arm, supported one of the largest gas flaring reduction projects in the world in Iraq by arranging a $360 million loan, helping avoid unnecessary flaring while supporting Iraq's energy transition and expanding energy access for the poor.

Last Updated: Mar 31, 2023

We support countries to ensure that the transition to more diversified and cleaner sources of energy meets growing demand, brings economic growth, and creates jobs.

The Bank Group is one of the largest providers of financing for renewable energy and energy efficiency projects in low- and middle-income countries.

Below is a selection of our key investments and results:

Renewables

• Over the last five years, the World Bank committed over $7 billion to renewable energy generation projects. In FY18-22, around 7.6 GW of renewable energy generation capacity was constructed or rehabilitated through World Bank operations.
• Solar and wind technologies are revolutionizing the power sector. They can become a game changer for many developing countries as solar and wind are abundant, cost-competitive, and a source of reliable power when combined with battery storage.
  • In Maldives, two World Bank projects will install over 50 megawatts (MW) of solar capacity and 40-megawatt hours of battery storage, saving about 30 million liters of diesel and reducing fuel imports by $30 million each year.
  • In India, the World Bank has provided $3 billion in lending to reduce reliance on fossil fuels and achieve 50 percent renewable energy by 2030. Renewable energy programs are expanding solar parks, roof-top solar installations, and battery capacity, saving more than 2.4 million tons of greenhouse gas emissions a year
  • In Yemen, World Bank enabled over 91,000 households - 21 percent of which were headed by females – to acquire subsidized solar energy systems that support healthcare, education, and water services for 3.2 million people.
  • In Bolivia, a World Bank-supported renewable energy has connected some 20,200 people to the power grid in remote, underserved areas.
  • In Bangladesh, the World Bank supports the largest off-grid program in the world through 2.41 million solar home systems, 1,300 solar irrigation pumps, 14 solar-based mini grids and 3 million efficient cookstoves. Around 4 million people in rural areas now have reliable access to clean energy through this program, which has created 30,000 jobs.
  • In Uzbekistan, new solar power plants supported by the World Bank will expand access to clean energy, providing 1 Terawatt-hour of renewable electricity and avoiding around 110,00 metric tons of CO2 emissions each year.
• Hydropower is a clean, renewable energy that is one of the lowest-cost sources of electricity for consumers. Since 2002, the World Bank has supported 131 hydropower projects, in 68 countries, for a total investment of $17 billion.
  • In Pakistan, WB support for Tarbela hydropower provides clean energy to millions of people and has saved the country $2 billion.
  • In Vietnam, we helped develop the Trung Son hydropower plant, which has supplied 1 billion kilowatt-hours (kWh) of low-cost electricity since 2017, improving the livelihoods of 3,400 households and reducing greenhouse gas emissions by 1 million metric tons annually.

Energy efficiency

• Energy efficiency is almost always faster and cheaper to implement than building new generation capacity.
• The World Bank invested about $4.6 billion to support energy efficiency in FY18-22, including direct investment in public infrastructure such as public buildings or street lighting.
  • In Benin, we support improving energy efficiency, in part by providing 24,670 new households access to improved cooking equipment and 25,000 households access to improved cookstoves. More than 113,000 tons of CO2 emissions have been avoided because of the improved efficiency of lighting and appliances.
  • In India, reducing energy demand through measures—ranging  from subsidized energy tariffs to deploying 366 million LED bulbs – will save 11,200 GWh of electricity every year.
  • In Uzbekistan, where buildings account for 50% of energy consumption, the World Bank is improving the energy efficiency of public buildings.

Energy access

• In FY18-22, the World Bank connected or improved the connection to the electricity of about 77 million people.
• The World Bank has more than doubled its annual financing for energy access from over $400 million in FY13-15 to over 1 billion in FY19-22.
• In the last five years (FY18-22), the Bank committed $5.7 billion to further direct energy access programs, mainly in Africa.
  • In Rwanda, WB helped the country reach near-universal electricity access by 2026, up from just 6% in 2009, by providing new or improved energy grid access to 230,000 households and off-grid energy access to another 150,000 households.
  • In Tanzania, we helped provide more than 4.5 million people with access to electricity and added new connections to more than 1,600 healthcare facilities and nearly 6,000 educational institutions since 2017, one of the fastest rates for energy access expansion in Sub-Saharan Africa over the past decade.
• Modern solar mini-grids bring energy to remote populations not connected to the electricity grid, providing enough electricity for life-changing electric equipment—for medical equipment in hospitals; for pumping clean water in farming communities—becoming the least-cost way to bring reliable and clean electricity to remote communities.
  • The World Bank's mini grid portfolio amounts to over $1.4 billion and will support more than 3,000 mini-grids in 30 countries, bringing electricity to more than 13 million people by 2029.

Energy for clean cooking

• Today, 2.4 billion people still cook with traditional polluting fuels and technologies, severely impacting health, gender, economic, environmental, and climate outcomes. Women bear a disproportionate share of this cost in the form of poor health, safety, and lost productivity.
• The Bank’s support to clean cooking between FY17-23 totals nearly $248.5 million in 29 countries —mainly in Africa and Asia.
• The Bank established the Clean Cooking Fund through ESMAP in FY20 with a funding target of $500 million, aiming to leverage $2 billion in public and private investments to help 200 million people gain access to clean cooking.
  • The Clean Cooking Fund’s current portfolio in Rwanda, Niger, Mozambique, Uganda, Chad, and Tanzania has leveraged $46.5 million in IDA financing and $10.81 million in carbon finance, and $68.25 million in private finance to help 10.12 million people and 750 schools gain access to clean cooking.

Just Transition away from coal

• Since 1995, the World Bank has provided more than $3 billion to support just transitions away from coal —work that focuses on the welfare of impacted workers and communities, while remediating and repurposing former mining lands and coal-fired power plants.
  • In South Africa, a new $476 million World Bank loan will help decommission the Komati coal-fired power plant and repurpose it into a renewable station, and create opportunities for workers and communities during the transition process. This support will benefit over 650 Komati workers and an estimated 15,000 people through community development and economic diversification in the Komati area
  • In Bosnia and Herzegovina, the Bank will provide $60 million to remediate and repurpose coal brownfields in 3 coal mining sites and attract new investment in the region.
  • In India, the Bank's $3 billion India energy portfolio combines policy support, technical assistance, capacity building, and lending to help India reduce its costly reliance on fossil fuels and achieve a target of 50 percent renewable energy by 2030.

Methane reduction

• World Bank is leading the effort on methane emission reduction. Given the short-term potency of methane, cost-effective interventions to reduce methane emissions should be an immediate priority for the sectors with the largest emissions.
  • IFC supported one of the largest gas flaring reduction projects in the world in Iraq that helped avoid unnecessary flaring while supporting Iraq's energy transition and expanding energy access for the poor
  • The Global Gas Flaring Reduction (GGFR) initiative works with companies and governments to reduce flaring and methane emissions produced in oil production.

Battery Storage

• The Accelerating Battery Storage for Development Program aims to fundraise $1 billion in concessional funding and mobilize at least another $3 billion from the public and private sectors over the next 5-6 years. The goal is to finance 17.5-gigawatt hours (GWh) of battery storage by 2025 – more than triple the 4.5 GWh currently installed in all developing countries.
• So far, the program has mobilized $725 million in concessional funding and will provide 4.7 GWh of battery storage (active projects), supplemented by 2.4 GWh (future pipeline).

Utilities

• Electric utilities are the backbone of power delivery, generating, transmitting, and distributing electricity for homes and businesses. The World Bank supports countries to improve utilities’ performance through policy, regulatory, institutional, and governance reforms. We also assist utilities in improving their operational and financial performance, commercial management systems, revenue protection programs, and automation of their internal processes.

• From 2018 to 2022, over $27.3 billion of the World Bank financing supported projects with a utility component.

• In Rwanda, the World Bank has helped increase electricity access from 10 percent in 2010 to 54 percent in 2020 by improving the quality and reliability of electricity supply, and the capacity of the sector institutions, such as utilities.
• In 2022, the World Bank launched the Utility Knowledge Exchange Platform to help utilities, energy sector institutions, regulators, system operators, the private sector, and the World Bank identify best practices, improve operational efficiencies, stimulate businesses, and accelerate technological innovation.

Tackling energy access gaps during COVID

During COVID-19, the Bank Group has worked with governments, the private sector, and other partners to repurpose and accelerate energy operations to provide clean, reliable and affordable energy to hospitals and other critical health facilities—this includes energy for testing laboratories, cold storage for medicine and vaccines, and solar-powered water pumps.

• Nigeria, our response funded the electrification of priority public health facilities, including 100 isolation centers and 400 primary healthcare centers. Solar-hybrid mini-grids are supporting emergency operations and equipment to test and treat COVID-19 patients.
• Through ESMAP, the World Bank Group has provided additional financing to sustainably electrify healthcare facilities and cold-chain during COVID-19, especially in FCV countries.
• In Haiti, this funding helped install solar panels and battery energy systems in regional and district hospitals.

Last Updated: Mar 31, 2023