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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

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