Why the renewable energy transition in developing countries risks deepening inequality unless finance, technology and politics change course

The renewable energy transition in developing countries is accelerating, but not fast enough and not fairly enough. While global clean energy investment hits record highs, most financing bypasses poorer nations that still face energy poverty and fragile grids. This article unpacks the numbers, the politics, and the clash between supporters and critics of a “just” energy transition in the Global South.

In theory, the renewable energy transition in developing countries should be the development story of the century: sunlight turning into power in Sahelian villages, wind turbines spinning above coastal fishing towns, mini-grids lighting clinics that once relied on kerosene and diesel.

In reality, the picture is painfully uneven.

On the outskirts of Lagos, families still plan their evenings around blackouts and generator noise. In rural Pakistan, a solar home system powers one light bulb and a phone charger—but not the fridge or the irrigation pump. In Mozambique, villagers displaced by a controversial gas project now hear that rich countries want to walk away from fossil fuels—and from the financing they once promised.

The world is clearly spending more on clean energy than ever before. Whether that money will actually deliver power, jobs and justice in the Global South is a different question.

A boom in renewables—mostly somewhere else

Start with the good news.

Between 2015 and 2024, global renewable electricity capacity grew by about 2,600 gigawatts, a 140% increase. In 2024 alone, renewables accounted for 92.5% of all new power capacity added worldwide, pushing their share of total installed capacity to 46.4%.

Money is flowing, too. Global investment in the energy transition reached USD 2.4 trillion in 2024, with around USD 807 billion directed specifically to renewable energy technologies—a new record.

This is the story rich-country leaders like to tell at climate conferences: green growth, record installation, a world “on the move.”

Now the fine print.

According to the International Energy Agency, only about 15% of global clean energy investment in 2024 went to emerging and developing economies outside China. In other words, most of the money and most of the new capacity are still landing where poverty is lowest and capital markets are deepest.

In sub-Saharan Africa, which is home to 80% of the people worldwide who still lack electricity, average installed renewable capacity is just 40 watts per person—about one-eighth of the level in other developing countries.

The result is a paradox: a world racing to decarbonize, and a set of developing regions still waiting for the basics.

Energy poverty in an age of abundance

The numbers on access are sobering. The IEA estimates that in 2023 around 750 million people still lacked access to electricity, a slight improvement from 2022 but far off the pace needed to meet Sustainable Development Goal 7 by 2030.

Most of them live in sub-Saharan Africa. Yet a recent IEA report finds that less than USD 2.5 billion was committed for new electricity-access connections in sub-Saharan Africa in 2023—for an entire continent.

To put that in perspective, investors poured USD 386 billion into new renewable energy projects globally in just the first half of 2025. The gap is not technical; it is financial and political.

Capital is not only scarce, it is more expensive where it is needed most. REN21’s 2024 Global Status Report highlights that the cost of capital for onshore wind in low-income countries was 6.5 percentage points higher than in high-income countries in 2022, a spread that can make otherwise viable projects impossible.

So while the world trumpets record investment, many African, South Asian and small-island states are effectively told: decarbonize fast, but do it with costly loans, weak grids, and donor promises that may or may not materialize.

A just transition for whom?

International agencies are clear about what is needed in principle.

IRENA’s World Energy Transitions Outlook 2024 argues that staying on a 1.5°C pathway requires a “just and equitable global energy transition built upon renewable power, widespread electrification and energy efficiency.” At COP28, governments agreed to triple global renewable energy capacity by 2030, and IEA’s Renewables 2024 report now tracks whether countries are on pace.

At COP29 in Baku, nearly 200 countries went further, adopting a new climate finance goal aimed at helping developing nations protect their people from climate disasters and “share in the vast benefits of the clean energy boom.”

Supporters of this agenda point to concrete progress:

• Countries like India are rapidly expanding renewable capacity, with firms such as Serentica Renewables planning to invest USD 10–11 billion to reach 17 GW of capacity by 2030, aligned with India’s national target of 500 GW of non-fossil power by that year.
• The IEA’s “Affordable and Sustainable Energy System for sub-Saharan Africa” programme supports African governments to design evidence-based policies for universal access.
• Countries like Canada are doubling their international climate finance, pledging USD 5.3 billion between 2021 and 2026 to support low-carbon, climate-resilient development in poorer nations.

From this vantage point, the renewable energy transition in developing countries is not only achievable; it is inevitable, provided that rich countries honor their finance promises and private investors are nudged with guarantees, concessional loans and risk-sharing tools.

Supporters: “This is the development opportunity of our time”

Supporters of an accelerated shift to renewables in the Global South make three main claims.

First, renewables are now the cheapest new power in many settings.
UN and IRENA data show that the cost of solar and wind has fallen so quickly that in much of the world, new renewable capacity is cheaper than new fossil plants—and often cheaper than operating existing coal. For countries that import oil and gas, building local solar and wind reduces both emissions and energy import bills.

Second, renewables can end energy poverty faster than fossil fuels.
For remote villages far from any national grid, a cluster of solar panels and batteries can bring electricity years before a coal plant or gas pipeline could. IEA analysis of electricity access scenarios shows that decentralized renewables—mini-grids and solar home systems—are often the least-cost option for reaching the last mile in Africa and South Asia.

Third, this is an industrial opportunity, not just a climate obligation.
Countries that invest early in manufacturing, assembly, and servicing of solar panels, batteries and grid equipment can create jobs and exports, not just buy equipment from abroad. Chinese firms, for example, have used solar manufacturing to dominate global markets; now they are moving aggressively into battery storage as well.

Supporters see no contradiction between development and decarbonization. In their view, the real injustice is that poorer countries are being left out of the clean-energy boom—not that they are being asked to join it.

Critics: “Don’t ask us to leap off a cliff you climbed slowly”

Critics, especially in parts of Africa and fossil-fuel-rich developing countries, are wary.

They look at Europe’s green energy rush, where a rapid pivot away from fossil fuels has helped cut emissions by about 30% since 2005—but also contributed to some of the highest electricity prices in the world, straining industry and households. They see a continent still reliant on imported gas when the wind doesn’t blow, scrambling to shore up its energy systems while populist parties capitalize on public anger.

They also look at decisions like the UK’s recent choice to withdraw USD 1.15 billion in support for a major gas project in Mozambique, citing climate and security concerns after years of violence around the site. Environmental groups hailed the move. Mozambican voices are more divided: some welcome the attention to human rights and climate; others ask what will replace the promised jobs and revenue.

From this perspective, the renewable energy transition in developing countries sometimes sounds less like an opportunity and more like being told to skip the “cheap energy” phase that powered Europe, the U.S. and China to prosperity.

Critics raise hard questions:

• If renewables are so cheap, why is private capital still avoiding the poorest countries or demanding punishing returns?
• If rich nations are serious about a just transition, why do climate-finance pledges remain in the billions while needs are in the trillions, with one assessment estimating annual needs in low- and middle-income countries at USD 200–400 billion for loss, damage and resilience alone by 2030?
• And why, they ask, should countries that emit a fraction of historical carbon be told to close coal plants while high-income economies continue to approve new oil and gas projects?

For many policymakers in the Global South, “premature decarbonization” is a real fear: the idea that moving too fast, without adequate support, could lock in high energy prices, unreliable power, and political backlash before the benefits of clean energy are fully felt.

The financing trap

Behind nearly every argument lies the same trap: money.

Climate policy institutes tracking global energy-transition finance note that while headline figures in the trillions make for good speeches, actual flows to the poorest countries remain measured in single-digit billions.

Two dynamics reinforce each other:

1. High risk, high cost of capital
   Investors perceive political and currency risks in many developing countries and demand higher returns. That makes projects more expensive, which then confirms the narrative that these markets are “difficult.”
2. Debt overhang
   Many low-income countries already face heavy debt burdens. New loans for clean energy—when they come—risk deepening fiscal stress unless grants and highly concessional finance play a bigger role.

Calls for reforming multilateral development banks, recapitalizing climate funds, and expanding guarantee instruments are essentially about breaking this loop so that renewable energy transition in developing countries is financed at something closer to rich-country rates.

What a fair transition would actually look like

Strip away the rhetoric, and a just renewable transition in the Global South would need at least five elements:

1. Cheap, patient capital at scale
   Not just scattered grants, but massive concessional lending, guarantees, and loss-absorbing capital that bring down financing costs for renewables, grids and storage to levels competitive with rich countries. COP29’s new finance goal is a start, not an endpoint.
2. Grids and storage, not just solar panels
   It is politically easy to fund shiny generation projects; harder to fund transmission lines, distribution networks and storage, which are essential to keep the lights on when the sun sets. India’s Resonia, for example, is planning billions in grid investment just to handle growing renewables.
3. Respect for energy sovereignty
   Countries will make different choices. Some will bring on-line gas as a transition fuel; others will bet heavily on hydro or geothermal. Rich nations must be willing to support diverse pathways as long as they are compatible with global temperature limits, rather than imposing one-size-fits-all bans that ignore local realities.
4. Local jobs and manufacturing, not just imports
   The transition will only be politically sustainable if it creates visible jobs: training electricians and technicians, building local assembly plants, supporting domestic supply chains wherever feasible. Partnerships that simply ship panels and turbines from North to South will not be enough.
5. Linking energy access with climate goals
   Every electricity-access plan in Africa, Asia and Latin America should be seen as a climate plan as well. The quickest path to universal access is now, in many contexts, a renewable path. Aligning SDG7 (energy access) with climate targets can unlock concessional finance and technical support instead of treating them as separate agendas.

Supporters vs. critics: different fears, shared stakes

In the end, supporters and critics of the rapid renewable energy transition in developing countries are not arguing about physics; they are arguing about risk.

• Supporters fear that without a rapid, financed transition, the Global South will be left with stranded fossil assets, worsening climate impacts, and a missed chance to leapfrog into a cleaner, more resilient economy.
• Critics fear that without a fair deal on finance and technology, the same transition will leave their countries stuck with fragile grids, expensive power and renewed dependence on foreign capital and hardware.

Both are, in their own way, right.

What they share is a recognition that energy is not just about kilowatt-hours; it is about who gets to live with a fridge, a fan and a functioning hospital—and who doesn’t. It is about whether a young engineer in Nairobi finds work building solar mini-grids at home, or leaves for Europe because the only steady power is elsewhere.

The renewable energy transition in developing countries will not wait for consensus. Panels are already being installed, grids are already being stressed, climate disasters are already knocking out old infrastructure. The only real choice left is whether this transition will be something done to poorer countries, or something built with them.

That answer will determine not just the trajectory of global emissions, but the everyday reality of billions of people who are tired of hearing about the green future—and ready, finally, to switch on the light.