In Short : IEEFA emphasizes targeted co-financing as key to enabling a just energy transition in emerging economies. By blending public and private capital, this approach helps de-risk smaller clean energy projects like solar mini-grids. It supports underserved communities, attracts institutional investors through project aggregation, and aligns with global transition finance goals to scale inclusive, sustainable energy solutions.
In Detail : The Institute for Energy Economics and Financial Analysis (IEEFA) has stressed the need for targeted co-financing to support a just transition in emerging economies. This approach, commonly known as blended finance, combines public and private capital to accelerate clean energy investments where market conditions may otherwise discourage private participation.
Blended finance involves using concessional public funding to de-risk renewable energy projects. This lowers the perceived financial risk for private investors and encourages their involvement in sectors or regions that might not otherwise attract sufficient funding.
IEEFA highlights that many clean energy projects in emerging markets, such as solar mini-grids, are small in scale and struggle to secure commercial financing. Blended finance helps address this by making such projects more financially viable and appealing to investors.
One of the key strategies includes aggregating smaller projects into larger portfolios. This increases scale and efficiency, enabling institutional investors to engage in clean energy financing while spreading risk across multiple ventures.
Such a model not only advances clean energy deployment but also delivers significant social and environmental benefits. It helps bring electricity to underserved areas, improves livelihoods, and promotes economic development in regions that are often left behind.
IEEFA also underscores the importance of a clear policy framework and well-defined roles for public and private stakeholders. Without these, blended finance mechanisms may face operational and implementation challenges.
Capacity building is another crucial component. Training, knowledge sharing, and drawing on past lessons are essential to make blended finance a reliable tool for energy transition in developing economies.
The initiative aligns with broader international efforts, such as the G20’s transition finance framework, which seeks to mobilize cross-border capital into clean infrastructure and hard-to-abate sectors.
Ultimately, IEEFA believes that targeted co-financing provides a practical and scalable blueprint. It can drive meaningful progress toward inclusive, sustainable energy transitions across emerging economies, ensuring no community is left behind.
