Small-scale renewable energy projects are crucial to meeting the goal of universal access to electricity and clean cooking facilities by 2030, but too many investors are relying on utility scale projects because of the lower risk. Traditional climate financing is not working a decentralized projects are “just not bankable”, says Neha Rai, senior researcher at the International Institute for Environment and Development (IIED). Some development finance firms are looking into ways to meet the US$50 billion a year needed to achieve the SDG target. ClimateCare and it’s partner, Pamoja Life, provide a distribution line of affordable, off-grid solar lighting and other other carbon products, to consumers who can’t justify the cost of a clean cookstove. ClimateCare argues that diversified projects have several possible outcomes that satisfy both public and private goals; uncorrelated revenue streams improve the resilience of a project and reduce the risk to commercial investors. Currency volatility is another bottleneck in climate finance. Foreign currency loans can create a mismatch between two currencies and impose stress on small businesses, thus climate financiers overwhelmingly opt for concessional loans for utility-scale projects. Indian solar firm Frontier Markets is working with philanthropic groups to create a low-interest loan, that will give them access to capital from bank and allow them to make loans to people and businesses interested in solar. Meeting the 2030 goal will take innovative forms of finance that rely on both public and private stakeholders, from small to large firms.
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