INTRODUCTION AND BACKGROUND
Characterised by remoteness from global markets due to the absence of territorial access to the sea,
landlocked developing countries (LLDCs)1 grapple with a myriad of special challenges, including complex procedures for border transit exacerbated by poor infrastructure, inefficient logistics systems and weak institutions. As a result, LLDCs sustain considerably higher transactional costs for transport and associated trade as compared to coastal territories. Subsequently, the steep costs create a significant fiscal deficit, which has a negative effect on LLDC’s budgets and disproportionately impacts progress towards economic development (UN-OHRLLS, 2020a). LLDCs’ vulnerabilities with respect to international trade and transit have further been exacerbated by the COVID-19 pandemic, as many countries continue to resort to restrictions on free movement of goods and people.
LLDCs’ progress on energy access and renewable energy deployment While notable progress has been made towards improving access to electricity in recent years (declining globally from 1.2 billion people unserved in 2010 to 733 million in 2020), about 215 million people in LLDCs continue to lack access (IRENA, IEA, UNSD, World Bank, WHO, 2021) (IRENA et al., 2021). While the average level of electricity access rates in LLDCs grew from 45% in 2010 to 60% in 2020 (World Bank, 2021), this is
significantly lower than the global average of 83% in 2010 and 91% in 2020.
Several factors such as adaptability and scalability have precipitated electrification via off-grid solutions
(Figure 5). Off-grid renewable technologies provide a viable electrification solution that requires low initial investment, is rapidly deployable, is environmentally sound, can be suited to match local needs and has the potential to empower rural communities, with a focus on youth and women, while enabling agricultural activities.
THE RATIONALE FOR RENEWABLES IN LLDCS
The global transition towards sustainable energy systems is inexorable. LLDCs – many of them rich in
renewable resources – can take full advantage of decreasing renewable energy costs and make progress
in realising a clean energy transition and close the access gap, while creating new jobs and advancing
socio-economic and industrialisation objectives. This chapter provides an overview of the factors that make renewables a viable option, including renewable energy costs, innovation trends, cross-border electricity trade, global impetus to achieve universal access, and associated socio-economic impacts.
Renewable energy costs
Despite the impact and disruption caused by COVID-19 pandemic, renewables recorded notable resilience to become more competitive than new fossil-based electricity. Driven by enabling policies, rapidly evolving technologies, effective supply chains and economies of scale, solar PV and wind became the most costeffective sources of electricity.
IRENA analysis (Figure 8) indicates solar PV to have recorded the most significant cost decline over the
decade 2010-2020 at 85%, with concentrated solar power (CSP) at 68%, onshore wind at 56% and offshore wind at 48% (IRENA, 2021b). Vulnerable economies such as LLDCs with growing electricity demand should leverage competitive renewable power generation costs and shift investment from fossil fuel power generation towards renewables to benefit from the much-needed socio-economic development.
Cross-border electricity trade in renewable energy
Half of the LLDCs are net importers of energy. Renewable energy can be an important tool for promoting trade facilitation and making supply chains more efficient. For LLDCs, reliable renewable energy can reduce delays caused by power outages at border crossings and customs clearance, as well as other transit processes. Greater efficiency in their operation would reduce the cost of transactions and expand opportunities for LLDCs to participate in international markets.
Renewable energy for universal energy access
Access to electricity is more likely to be achieved if centralised connections are deployed together with
standalone systems. This calls for a paradigm shift from implementation mainly centred on providing on-grid electricity to households. It is also important to ensure access to levels of electricity that are higher than those generally required by households in accordance with the multi-tier framework, which measures access based on attributes such as affordability, safety and reliability. Electricity supply of Tier 3 and above is necessary to support productive uses that are vital for socio-economic development and job creation. Assessments of energy needs for productive user groups should therefore be undertaken (IRENA et al., 2021). Moreover, stronger emphasis should be placed on promoting modern fuels and technologies for cooking and heating.
Renewable energy and resource potential
In most LLDCs, current generation capacity does not reflect the existing renewable resource potential
and progress towards exploiting renewables has been delayed. Several studies – undertaken to better
understand the issues affecting renewable energy deployment and subsequent project success – identify
inadequate resource assessment as one of the critical factors contributing to slow deployment of renewables in developing countries such as LLDCs, where such information is insufficient. By conducting resource assessments, LLDCs could deepen understanding of the viability of renewable energy sources, facilitate project development planning, boost local capacity, and inform renewable energy targets and commitments in their NDCs. Data and information on renewable energy techno-economic potential underline the overarching framework for renewable energy project development, and influence decisionmaking by public authorities and policy makers responsible for planning their countries’ energy future.
Analysis by GOGLA, the association for the off-grid solar energy industry, roughly estimates there to be
342 000 full-time equivalent jobs in direct off-grid solar employment in areas of sub-Saharan Africa where the majority of LLDCs are located. Additional analysis shows 56% of these jobs to be in rural areas and 27% filled by women (IRENA et al., 2021; WHO, 2021). Nonetheless, despite the positive socio-economic footprint, deployment of renewables is still relatively limited in most developing countries, including LLDCs. Box 8 presents examples of the socio-economic benefits of renewable energy projects financed by the IRENA/Abu Dhabi Fund for Development Project Facility in selected LLDCs. For LLDCs to realise the domestic socio-economic benefits and leverage the job opportunities that emanate from renewable energy deployment, a range of targeted measures – including industrial policies, programmes for educational and skills development, and enabling labour market interventions – would be needed to develop local supply chains. IRENA’s Leveraging Local Capacity series further studies the nature of jobs created along the supply chain for various renewable energy technologies, including the materials and equipment needed, and suggests ways to enhance local industries (IRENA, 2017). Governments in partnership with labour stakeholders could co-ordinate initiatives, such as support for SMEs, to ensure broader societal transformation through renewables. Providing financing to SMEs and entrepreneurs working in renewable energy should also be considered. Finally, developing linkages between research institutes worldwide focused on renewable energy and domestic stakeholders should also be prioritised.
Renewable energy finance and investment trends
A transformation of the global energy system compatible with internationally agreed climate and
development objectives requires a significant scale-up in energy investment. Globally, up to USD 57 trillion needs to be invested in the energy sector between now and 2030 (IRENA, 2022b), in order to cap global temperature rise to 1.5°C and limit CO2 emissions to net zero (Figure 12) (IRENA, 2021c). Further, the analysis estimates that up to USD 0.7 trillion of annual fossil fuels investment should be redirected towards energy transition technologies. This would require substantial effort in project facilitation and the mobilisation of financing from public, private, banking and non-banking financial institutions.
Figure 13 shows international public finance flows to LLDCs by renewable energy technology, representing annual commitments from 2000 to 2019 in support of renewable energy-related research and development and production. The 2019 commitment of USD 16 billion presents a decrease of 20% in comparison to 2018. Globally, financial flows in support of clean energy to all developing countries dropped for two consecutive years, whereby a total of approximately USD 11 billion was recorded in 2019. This means that only 15% of these commitments reached LLDCs in 2019.
THE WAY FORWARD
This chapter presents an overview of the policy framework to support the integration of renewable energy. It further discusses the challenges facing renewable energy development and makes recommendations to drive investment and funding, including showcasing best practices on renewable energy deployment in LLDCs.
As renewable technologies drive the energy transition and require an accelerated rate of deployment to
reduce emissions in the energy sector, policy makers are confronted with new challenges due to the
intermittency of renewable energy resources. A comprehensive policy framework (Figure 15) is required that addresses policies related to deployment, integration, enabling environment, structural change and just transition, as well as global and south–south co-operation.
In order to help LLDCs implement these actions, it is important that the UN system and other relevant
international partners provide the facilitation for the scaling up of investment in renewable energy, backed by policy, analytical and technical support to place renewable energy at the centre of LLDCs’ post-COVID green recovery plans. With a view to ensuring LLDCs progress towards achieving the VPoA and the SDGs, international partners should also provide meaningful support to LLDCs to help strengthen capacities for planning, implementing and monitoring renewable energy policies, as well as developing bankable projects with access to climate funding for energy projects. LLDCs are encouraged to utilise existing facilities such as the Climate Investment Platform, which assists in creating a pipeline of projects and supports matchmaking with potential investors, and the Energy Transition Accelerator Financing (ETAF) platform, which could provide capital to accelerate the scale up of renewable energy deployment. LLDCs are also encouraged to request technical assistance to utilise the IRENA Renewables Readiness Assessment tool to identify recommendations to scale up renewable energy.
Regional organisations are encouraged to develop regional policies and implementation processes that
facilitate cross-border renewable energy co-operation in collaboration with multilateral development banks – particularly in the context of power pools – to scale-up regional generation and transmission initiatives.