Renewable energy is long-term investment
Electric utilities are critical for meeting UN’s Sustainable Development Goal 7—ensuring access to affordable, reliable, sustainable, and modern energy for all. The World Bank is playing its part by supporting electric utilities in their transformation journeys with financing and advisory services that increase their operational efficiency and build their institutional capacity.
INITIAL COST TO TRANSFORM
Fossil fuels were relatively inexpensive energy sources for multiple eras. Therefore, investing upfront money in new clean energy infrastructure was difficult for countries and individuals. Especially in developing countries, lack of access to finance under reasonable terms makes the costly upfront investments in renewable energy unaffordable. In addition, macroeconomic and political uncertainties discourage private sector investors from supporting renewable energy. Breaking free from fossil fuels is more challenging during the current crisis as countries scramble to ramp up short-term solutions for fuel shortages. For an individual, it may be more expensive to buy a new electric car; however, the savings over the life of the vehicle from the reduced costs of fuel and servicing will be more than the initial costs. Therefore, not every country and individual can afford the cost of transferring from nonrenewables to renewables even though there is sufficient evidence that renewable energy can lead to sustainability in the long term.
LONG-TERM INVESTMENT FOR PROFIT, PEOPLE, AND PLANET
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. Electricity generated from renewable energy has been accelerating as the costs of these technologies have been declining. For example, the cost of electricity generated by solar mini-grids has gone down from $0.55/kWh in 2018 to $0.38/kWh in September, according to the World Bank. Modern solar mini-grids bring energy to remote populations not connected to the electricity grid. They are becoming the cheapest way to obtain reliable and clean electricity for remote communities.
Weaning the world off fossil fuels may seem daunting in these troubled times, but it will only become costlier the longer it takes. We have the technology and financial tools needed to create a greener world while boosting economies and resilience. We must invest in our future now, not later.
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