Scaling Renewable Energy Infrastructure in Emerging Markets: Investment Leverage for Climate Resilience and Long-Term Returns

The global energy transition is accelerating, but emerging markets remain both a critical battleground and an untapped opportunity. Despite hosting over half the world's population, these economies account for less than 15% of global clean energy investments, despite their immense growth potential, according to the IEA executive summary. By 2023, however, investments in energy systems across low- and middle-income economies had surged to $2.2 trillion-a 35% increase since 2020-driven largely by China's $1.1 trillion contribution, a trend detailed in a WEF analysis. Yet, to align with the Paris Agreement, emerging markets will require $4.3 trillion annually in investments until 2050, with $2.6 trillion directed toward low-carbon solutions like renewables, as the BloombergNEF report finds. This gap underscores the urgent need for innovative financing and policy frameworks to unlock scalable, climate-resilient infrastructure.

The Investment Landscape: Challenges and Opportunities

Emerging markets face persistent barriers to renewable energy scaling, including currency volatility, political instability, and bureaucratic inefficiencies, the IEA report notes. Misconceptions about risk are often exacerbated by fragmented data systems, though initiatives like the GEMs consortium are improving transparency and investor confidence, as the WEF analysis observes. De-risking strategies-such as guarantees and blended finance-have proven pivotal. For instance, PIDG's GuarantCo provided an $8.7 million guarantee facility to Africa GreenCo, mobilizing $270 million in private capital for clean energy projects (described in the WEF analysis). Similarly, the Climate Finance Partnership leveraged $130 million in catalytic capital to attract $540 million for renewable energy and energy efficiency projects in Southeast Asia, Latin America, and Africa, also highlighted in the WEF analysis.

Policy progress is also evident. BloombergNEF's Net Zero Scenario reveals that 95% of emerging markets now have clean energy targets, with auctions and tenders available in two-thirds of these markets, according to the BloombergNEF report. India, for example, has topped the Climatescope ranking for two consecutive years due to its robust clean energy policies and investment environment, the BloombergNEF analysis notes. Kenya, Nigeria, and Namibia have also seen significant upward movement in rankings, reflecting growing momentum, though only 7% of emerging markets with clean energy policies have met their targets, with over three-quarters still facing a medium or large gap in achievement, the BloombergNEF report finds.

Case Studies: Proving the Model

Successful projects demonstrate the viability of investment leverage in emerging markets. In Malaysia, the World Economic Forum's initiative led to the development of the first large-scale Renewable Energy Zone and a national Carbon Capture Utilization and Storage Hub, as described in a WEF initiative. South Africa's Small Scale Embedded Generation credit guarantee facility and Colombia's clean hydrogen lending programs highlight tailored policy solutions, with the WEF initiative providing additional context. Indonesia's East Sumba solar and battery project, supported by an accelerator program, exemplifies how blended finance can address integration challenges like grid limitations, another example covered by the WEF initiative.

Private-sector innovators like IFM Investors and Breckinridge Capital Advisors are also pivotal. IFM's integration of renewable energy with digital infrastructure-such as energy storage and smart grids-has shown how technological convergence can enhance returns while addressing climate risks, according to an IFM analysis. Breckinridge's climate vulnerability customization allocates capital to communities exposed to physical climate risks, achieving a 27% average return over 10 years, as reported in a Breckinridge insight. These strategies align with broader trends, such as the normalization of climate risk disclosures and the growing importance of resilience-focused municipal bonds, points also made in the Breckinridge insight.

Blended Finance: A Catalyst for Scale

Blended finance mechanisms-combining public, philanthropic, and private capital-have emerged as a critical tool for de-risking investments. By 2025, such instruments had mobilized $261 billion for sustainable development in emerging markets, with Sub-Saharan Africa being the most targeted region, according to a Climate Finance guide. Guarantees, first-loss protections, and technical assistance grants enhance project creditworthiness, enabling private capital participation. For example, the Africa Renewable Energy Fund (AREF) uses a tiered structure of Development Finance Institution (DFI) equity and private investments to fund solar, wind, and hydro projects in Sub-Saharan Africa, as detailed in CEO Hangout case studies. The Green Climate Fund (GCF) has similarly mobilized billions for climate resilience, benefiting 344 million people across 99 countries, a pattern also covered in the CEO Hangout case studies.

Climate Resilience and Long-Term Returns

The financial and environmental returns of climate-resilient infrastructure are compelling. A study of 320 major resilience projects found an average return of 27% over 10 years, with every dollar invested generating $4–$10.50 in quantifiable benefits through avoided losses and development gains, according to a resilience investment guide. Climate-resilient infrastructure outperforms conventional assets by 20% in net-zero scenarios and 10% in limited climate action pathways, the resilience investment guide indicates. These metrics underscore the dual value proposition: mitigating climate risks while delivering robust financial returns.

Conclusion

Scaling renewable energy infrastructure in emerging markets is not merely an environmental imperative but a strategic investment opportunity. By addressing systemic risks through blended finance, policy innovation, and climate resilience frameworks, stakeholders can unlock trillions in private capital. The path forward requires collaboration between governments, multilateral institutions, and private investors to close the $6.9 trillion annual infrastructure gap by 2030, as illustrated in the Ceres case studies. As emerging markets continue to refine their clean energy policies and infrastructure, the alignment of climate resilience and long-term returns will become increasingly evident-a win for both the planet and portfolios.