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SUSTAINABLE DEVELOPMENT

Accelerating access to clean, reliable and affordable energy

How can communities and businesses across emerging economies harness the economic benefits of distributed renewable energy?

The challenges

Limited and unreliable energy constrains opportunity
High and volatile energy costs restrict productivity
The poorest and most marginalised communities remain hardest to reach
Market systems and diverse delivery ecosystems remain underdeveloped
Financing gaps, misaligned incentives and lack of data limit scale

The solutions

Scale distributed renewable energy and productive use
Mobilise climate finance and de-risk investment
Strengthen markets and delivery ecosystems

Access to affordable, reliable energy is still far from universal

While 92% of the global population now has basic access to electricity, progress is not keeping pace with the ambition of achieving universal access under UN Sustainable Development Goal 7 (SDG7) by 2030. An estimated 666 million people remain without electricity,1 with the challenge increasingly concentrated in low-income, remote and weak or off-grid settings. Furthermore, the International Finance Corporation (IFC) identifies unreliable grid access as a significant global issue, estimating that 1.5 billion people worldwide live with broken or highly intermittent grid services. This forces heavy reliance on expensive, polluting fossil-fuel backup generators, costing emerging economies between $30 and $50 billion annually in fuel alone.2

Clean energy solutions are increasingly proven and cost-competitive, but scaling them depends on viable business models and private sector delivery. In many markets, enterprises lack the capacity, financing and enabling conditions to deploy solutions at scale, while investors face limited pipelines of investment-ready opportunities and insufficient performance and financial data required to make investment decisions.

Distributed renewable energy (DRE) presents a significant opportunity to address this gap. Technologies such as solar, battery storage and mini-grids enable power to be generated closer to where it is needed, improving reliability, reducing costs and extending access to underserved communities and businesses.

Delivered through locally relevant business models and enterprises, DRE solutions have proven to support economic activity, strengthen livelihoods and contribute to more resilient, low-carbon energy systems. When energy supports agriculture, commerce, transport and services, it enables income generation, strengthens demand and improves system viability. By linking DRE with productive use and private sector development, energy access becomes a driver of economic growth and resilience, rather than an end in itself.

In numbers:

"Access to reliable, affordable and sustainable energy is fundamental to improving livelihoods and unlocking economic opportunity."

Iain Meager, Director, Innovation The Carbon Trust

THE CHALLENGES

1. Limited and unreliable energy constrains opportunity

'In rural and remote areas, the challenge is not only a question of connection, but whether viable and scalable energy delivery models exist at all.'

The persistence of the global energy gap reflects deeper systemic challenges. In rural and hard-to-reach contexts, low population density, high capital costs and weak infrastructure make conventional grid expansion slow and often unviable.

While global electrification has increased from around 84% in 2010 to over 90% today,3 headline access rates mask a more fundamental issue: in many markets, power remains intermittent, low-capacity or too costly to use productively. World Bank data show that 72.1% of firms in sub-Saharan Africa experience electricity outages, averaging 7.6 outages per month lasting 1.9 hours each, equivalent to around 14 hours of lost power monthly. Under these conditions, a nominal connection does not translate into reliable economic activity, with businesses facing lost operating hours, equipment damage and reduced productivity.4

Many businesses rely on backup generation as a result, but this is a costly and polluting coping mechanism. Around 51.1% of firms in sub-Saharan Africa own or share a generator,5 increasing operating costs, reducing competitiveness and lowering the economic value of electrification while driving emissions.

In rural and remote areas, the challenge is not only a question of connection, but whether viable and scalable energy delivery models exist at all. Grid extension is often not economically feasible in low-density settings with uncertain demand and high infrastructure costs, leaving many without a clear pathway to reliable electricity and reinforcing the need for decentralised solutions.

In agriculture, the lack of reliable energy contributes to significant post-harvest losses. In sub-Saharan Africa, the lack of reliable cold chain facilities contributes to losses of approximately 25-30% of animal products and 40-50% of perishable crops.6 In practice, this means that weak energy systems do not just affect consumption; they erode value creation across food systems.

These limitations extend beyond businesses into essential services. Health facilities require continuous, reliable electricity for refrigeration, sterilisation, diagnostics, communications and emergency care. Yet close to 1 billion people depend on health-care facilities with unreliable or no electricity. More than 1 in 10 health facilities in South Asia and sub-Saharan Africa lack any access to electricity, with the latter region lacking reliable power for half of its facilities.7

The above examples highlight that the impact of energy depends not only on whether it is available, but whether it is reliable, affordable and capable of meeting the needs of households, businesses and public services. Where these conditions are not met, opportunities for economic development and improved livelihoods fail to meaningfully develop.

2. High and volatile energy costs restrict productivity

'High and volatile energy costs are both a consequence of fuel prices and structural challenges in how energy is generated, distributed and used.'

For many households, small businesses and community services, the affordability of energy remains one of the greatest barriers to realising its full social and economic benefits. Where grid electricity is unreliable or insufficient, they are often forced to rely on diesel and petrol generators, among the most expensive and volatile sources of power. This creates a structural challenge: even where energy is available, it is frequently unaffordable, unpredictable, and poorly suited to productive use.

This exposure can leave energy users highly sensitive to global fuel price fluctuations. Periods of geopolitical disruption or volatility in energy markets can quickly translate into higher operating costs for businesses and higher household energy expenditure. For communities and enterprises already operating on tight margins, even short-term price increases can reduce income, limit service delivery, and delay investment decisions. Global energy shocks, such as those seen in the first half of 2026, reinforce existing inequalities in access to reliable and affordable power, rather than being the root cause of them.

The underlying economics of energy systems in these markets present additional challenges. Demand is often fragmented and relatively low at the household level, while productive uses of energy in sectors, such as in agriculture, small industry, and services, remain underdeveloped. Evidence from decentralised energy systems shows that low utilisation is a persistent issue, with available capacity often underused, particularly during daytime hours. This reduces overall system efficiency and drives up the cost per unit of electricity, as fixed costs must be recovered across a limited volume of sales.

As a result, high and volatile energy costs are both a consequence of fuel prices and structural challenges in how energy is generated, distributed and used. These dynamics limit the ability of businesses to plan, invest and scale, particularly in energy-reliant sectors such as agriculture, transport, healthcare and manufacturing. Addressing these challenges requires a more reliable supply and a stronger focus on enabling productive demand and improving the economics of energy systems over time.

As global energy access gaps narrow, the challenge is becoming increasingly concentrated among the hardest-to-reach populations and geographies.

3. The poorest and most marginalised communities remain the hardest to reach

'More than 117 million people are currently forcibly displaced worldwide, many living in fragile and conflict-affected environments where access to basic services remains limited.'

The global energy access gap is becoming increasingly concentrated in the hardest-to-reach populations and geographies. Today, 85% of people without electricity live in sub-Saharan Africa, while 84% are in rural areas.8 Clean cooking follows a similar pattern: around 2.1 billion people still rely on polluting fuels and technologies, with nearly half of those affected living in Africa and a similar share in Asia.9 As those still underserved are increasingly concentrated in rural, remote, low-income and weak-grid settings, the limitations of traditional delivery models are becoming more apparent, highlighting the need for solutions tailored to local contexts and realities.

Those in hard-to-reach, weak and off-grid contexts face a combination of barriers that make conventional energy access approaches difficult to deploy and sustain. Infrastructure is often absent or degraded, populations may be dispersed or mobile, and logistics can be significantly more complex and costly. Providers must operate in conditions of heightened uncertainty, while households often have limited and unpredictable incomes. These factors increase both the cost and complexity of delivery, making it harder to establish sustainable and scalable energy services.

The challenge is even more acute in displacement and humanitarian settings. More than 117 million people are currently forcibly displaced worldwide, many living in fragile and conflict-affected environments where access to basic services remains limited.10 Energy access challenges are particularly pronounced in displacement settings, where camps and settlements are frequently located beyond the reach of reliable energy infrastructure. An estimated 94% of displaced people in camps do not have access to electricity and 81% rely on firewood and charcoal for cooking. Meanwhile, humanitarian operations often remain dependent on diesel generation to meet essential energy needs.11

The result of these dynamics is a persistent inequality in access. Progress continues in more commercially viable or easier-to-reach markets, while those in fragile, remote and low-income contexts are reached more slowly or not at all. Closing the remaining access gap will require delivery models, financing approaches and partnerships specifically designed for these contexts, rather than relying solely on approaches that have succeeded in more accessible markets.

4. Market systems and delivery ecosystems remain underdeveloped

'While DRE solutions are technically viable and commercially promising, increased deployment depends on broader market conditions.'

Addressing these energy access and affordability challenges depends on the market systems, supply chains, financing mechanisms and delivery ecosystems that determine whether solutions can reach communities effectively and at scale. While DRE solutions are technically viable and commercially promising, increased deployment depends on broader market conditions including access to information, delivery system maturity, supportive regulation and effective coordination across different sectors. Where these conditions are still emerging, adoption slows and the cost of growth increases.

Access to reliable market intelligence remains a persistent challenge across many energy access markets. Information on customer demand, technology performance and business model viability is often fragmented or unavailable, making it difficult for businesses, investors and policymakers to identify where opportunities exist and which approaches are most effective. As a result, many technologies and delivery models operate with limited evidence on commercial performance and scalability, increasing uncertainty and slowing decision-making.

Effective coordination across market actors remains another important condition for growth. Fragmentation challenges are similarly evident in emerging, and interlinked, sectors such as e-mobility, where vehicle manufacturers, charging providers, electricity suppliers and payment platforms are often developing at different speeds or through inefficient vertical business models. Interoperability between charging infrastructure, payment systems and vehicle platforms remains an ongoing challenge in many markets, creating friction for users and increasing the complexity of scaling solutions.

Looking at the challenges of delivery ecosystems more widely, businesses often face limited local technical capacity, distribution networks and after-sales support, which can make it harder not just to deploy energy solutions, but to keep them running reliably over time. Without access to maintenance, repairs and customer support, systems can fail prematurely, undermining confidence and limiting long-term adoption.

Having supportive policy and regulatory frameworks in place also plays a critical role for growth. Inconsistent or unclear regulations can delay deployment, increase uncertainty and raise the cost of doing business. Standards, licensing arrangements and quality assurance mechanisms often evolve more slowly than emerging technologies and business models, creating additional barriers to growth and scale.

Although global investment in clean energy continues to grow, capital remains highly unevenly distributed. Africa, for example, receives only around 3% of global energy investment and roughly 2% of global clean energy finance, despite accounting for around 20% of the world’s population.

5. Financing gaps and misaligned incentives limit scale

'Although global investment in clean energy continues to grow, capital remains highly unevenly distributed.'

There is no shortage of promising clean energy technologies or entrepreneurial activity with the potential to help close the global energy access gap. The greater challenge lies in achieving sustained, large-scale deployment. Although global investment in clean energy continues to grow, capital remains highly unevenly distributed. Africa, for example, receives only around 3% of global energy investment and roughly 2% of global clean energy finance, despite accounting for around 20% of the world’s population.12, 13

This imbalance is particularly acute for DRE businesses. Companies operating in underserved markets often struggle to access finance at scale and terms required for growth. Limited lender familiarity with renewable energy technologies, unconventional business models, and local market conditions can increase perceptions of risk, while many businesses lack the track record needed to attract larger pools of commercial capital. As a result, persistent working capital challenges frequently limit expansion, slow growth and prevent businesses from reaching the scale needed to become investment-ready.

These financing challenges are often exacerbated by underdeveloped policy and regulatory environments. Where regulations are unclear, inconsistent or fragmented, developers and investors face greater uncertainty over project viability and long-term returns. This not only increases the perceived risk of investment but can also discourage market entry and slow the development of local clean energy sectors.

Structural affordability challenges further weaken the investment case. High upfront costs for technologies and installation can place clean energy solutions beyond the reach of many households, businesses and public institutions, particularly where purchasing power remains constrained. These pressures are compounded by high customer acquisition, distribution and servicing costs, especially in dispersed or low-density markets. Together, these factors can reduce margins, extend payback periods and increase the cost of scaling, even where underlying demand is strong.

At the same time, a lack of robust market data and performance evidence continues to hold back investment. Many companies and projects are often unable to demonstrate the operational performance, customer demand, revenue certainty or long-term reliability required by lenders and institutional investors. This limits the pipeline of investment-ready opportunities and contributes to a persistent gap between early-stage innovation and commercial deployment.

In many markets, the supporting institutions, supply chains and delivery networks needed to deploy capital efficiently are still developing alongside the sector itself. This can increase transaction costs, slow implementation and reduce the effectiveness with which investment is translated into sustainable energy access outcomes. The result is a persistent disconnect: while global capital for clean energy is growing rapidly, it continues to struggle to reach the markets, business models and project types where it could have the greatest impact.

THE SOLUTIONS

1. Scale distributed renewable energy and productive use

'A critical element of this transition is ensuring that energy access translates into tangible social and economic outcomes.'

Scaling DRE goes beyond improving access to electricity; it enables economic development, strengthens resilience, and enhances energy security in markets where unreliable power continues to suppress growth. By reducing reliance on expensive, volatile, and polluting fossil fuels, distributed renewables can reinforce local energy systems and underpin more inclusive, locally driven economic development.

A critical element of this transition is ensuring that energy access translates into tangible social and economic outcomes. When households, businesses and communities can use energy to increase productivity, generate income and access new opportunities, it becomes a driver of livelihoods and economic growth rather than simply a basic service. This, in turn, strengthens demand, improves asset utilisation and reinforces the commercial viability of energy systems, creating a self-sustaining cycle of growth, investment and expanded access. The scale of this opportunity is substantial, with the productive use of renewable energy market in rural sub-Saharan Africa estimated to reach USD 864 billion by 2030.14

Achieving this at scale depends on stimulating private sector growth across the energy access ecosystem. Local enterprises, SMEs, distributors, technology providers and service companies play a critical role in deploying solutions, building supply chains, supporting customers and creating sustainable markets. Strengthening these businesses through access to finance, commercial support and strategic partnerships helps build the local capabilities needed to scale energy access beyond individual projects and towards self-sustaining market growth.

Virtuous cycle of productive use

Driving productive use through catalytic funding and acceleration support

The Carbon Trust's work through the Powering Renewable Energy Opportunities (PREO) programme supports the growth of local enterprises that are using DRE to drive economic productivity and livelihoods. The programme helps businesses test and scale commercially viable models that link energy access to income generation, enabling productive use solutions to move beyond pilot projects and towards sustainable market growth. Through a combination of grant funding, technical assistance and partnership building, PREO supports enterprises to strengthen business models, demonstrate commercial viability and attract follow-on investment. Since 2019, the programme has supported more than 80 projects, created over 750 sustainable jobs, and expanded access to productive renewable energy solutions for more than 67,000 people across sub-Saharan Africa and the Pacific. PREO’s approach demonstrates how combining technology demonstration with commercial validation enables scale.

How PREO supported SokoFresh

SokoFresh, now an award-winning company that enhances economic opportunities for rural communities working in agriculture, were able to develop and commercialise a bundled cold-storage and market-linkage model tailored to the needs of smallholder farmers in Kenya. Early-stage grant funding and technical assistance from PREO enabled SokoFresh to test its cold-storage-as-a-service offering, refine its pricing and operations, and demonstrate a clear value proposition for farmers and buyers. By directly linking energy access to reduced post-harvest losses and improved market access, the model stimulated demand for both cooling services and higher-value agricultural markets. This in turn strengthened farmer incomes, improved utilisation of energy assets, and validated a scalable business model capable of attracting further commercial partnerships and investment.

How PREO supported KoolBoks

KoolBoks, a solar-powered cooling company now operating in over 14 countries across Africa, used PREO support to accelerate the development and deployment of a lease-to-own solar refrigeration model for market traders in Nigeria. Early-stage funding from PREO enabled the company to pilot and optimise its financing and distribution approach, reducing barriers to adoption for small businesses that would otherwise be excluded from productive energy solutions. By aligning affordability with clear income-generating benefits, through improved product preservation and increased sales, the model directly stimulated demand among traders. This early validation positioned Koolboks to scale rapidly, reaching over 200 customers with more than 300 units and subsequently securing a USD 2.5 million seed round to expand its operations and strengthen its market presence.

These examples show how linking renewable energy to productive economic activity can create commercially viable businesses that generate livelihoods, attract investment, and sustain long-term market growth. Achieving scale, however, requires solutions rooted in local demand, delivered through capable local enterprises, and enabled by strong market partnerships. By strengthening private sector participation and supporting productive use, DRE can drive job creation, expand livelihoods, and build more resilient local economies.

2. Mobilise climate finance and de-risk investment

Mobilising climate finance at scale requires an intentional approach to building investable opportunities. This starts with strengthening the fundamentals investors rely on: credible, scalable business models, predictable revenue streams, and clear pathways to growth. Reducing risk through validating technologies, demonstrating demand, and improving the conditions in which companies operate is central. Strengthening market transparency is equally important, ensuring investors can access robust data, see a clear pipeline of opportunities, and connect early-stage innovation with deployable capital.

This depends on three priorities: generating robust evidence on performance, cost, and demand to build confidence in scalability; developing a steady pipeline of opportunities by supporting companies to move from pilot to commercial viability; and deploying catalytic support to reduce early-stage risk and crowd in private capital.

The Carbon Trust’s work supporting programmes such as Energy Catalyst and the Zero Emission Generators initiative demonstrate how this can be applied in practice. By combining evidence generation, pipeline development, and catalytic funding, these programmes support innovators from feasibility and demonstration through to commercial scale, while strengthening their readiness to attract investment. To date, Energy Catalyst has committed more than £162 million across 336 projects in 48 countries, helping to build a diverse pipeline aligned with investor expectations. Meanwhile, ZE-Gen has mobilised £40m of a mixture of public and private capital with the intent to utilmately enable the replacement of millions of polluting and expensive fossil fuel generators.

MOPO provides a clear example of how this system-level approach translates into commercially viable growth. Supported through multiple TEA programmes at different stages of its lifecycle (including PREO, Energy Catalyst and ZE-Gen) the company has benefited from coordinated support spanning validation, evidence generation, and market development, helping to reduce risk and build investor confidence. Today, MOPO has delivered more than 40 million battery rentals across sub-Saharan Africa, enabling households and small businesses to power lighting, livelihoods, and essential services while reducing reliance on costly, polluting alternatives.

Alongside support for individual businesses, mobilising finance also requires financing solutions that address structural barriers across clean energy value chains.

Through ZE-Gen, the Carbon Trust in partnership with IKEA Foundation has supported the seed funding of the Green Genset Facility, a financing mechanism specifically designed to address working capital challenges faced by solar distributors in emerging markets. By tailoring financing terms and operating models to the needs of distributors, the facility is helping accelerate access to inventory, strengthening distribution capacity and expanding the deployment of clean alternatives to diesel generation.

In practice, mobilising climate finance is about enabling capital to flow effectively by strengthening the evidence, confidence and pipeline required to support investment in scalable clean energy solutions.

Alongside support for individual businesses, mobilising finance also requires financing solutions that address structural barriers across clean energy value chains.

3. Strengthen markets and delivery ecosystems

Market enablers of scale:

Scaling clean energy access increasingly depends not only on deploying technologies, but on strengthening the markets and delivery ecosystems around them. In many contexts, the primary limitation is no longer a lack of innovation, but the absence of the conditions required for solutions to scale.

Across emerging markets, persistent structural barriers limit progress: fragmented value chains, weak or inconsistent standards, limited local delivery capacity, underdeveloped market data, and policy environments that create uncertainty for investors. As a result, many markets have a growing pipeline of promising technologies and business models, but lack the institutional, regulatory and market conditions needed for those solutions to achieve scale.

Addressing these obstacles requires support for individual projects and enterprises, as well as action to strengthen the wider market architecture that enables successful approaches to scale. While projects and businesses play a critical role in demonstrating technologies and delivery models, long-term market growth depends on the systems and institutions that surround them. This includes strengthening market intelligence, standards and interoperability, local institutional and technical capacity, and the policy and regulatory frameworks that shape investment and deployment decisions.

Evidence plays a central role in strengthening markets and delivery ecosystems. Early projects do more than demonstrate technologies: they generate insights into performance, cost and viability that can inform standards, policy and investment decisions. The UK’s Ayrton Fund and TEA portfolio demonstrates how connecting research, innovation and deployment can accelerate market development by translating evidence from pilots and demonstration into practical interventions that reduce uncertainty and enable scale. Together, these feedback loops help create the conditions needed for solutions to attract investment and achieve sustainable, market-led growth.

Through the Transforming Energy Access platform, the Carbon Trust and its partners have helped:

Improve clean energy access for over 37 million people

Supported 210,000 long-term jobs

Leveraged £1.9 billion in funding

Reduced 6.1 million tonnes of CO₂ emissions.

Other practical examples highlight how systemic barriers can be addressed through targeted market-development interventions. A scoping study undertaken by the Carbon Trust for the African Development Bank's Africa Mini-grid Market Acceleration Programme (AMAP) identified a range of ecosystem constraints limiting scale in the mini-grid sector, including capacity, compliance and market-development barriers. Rather than supporting individual projects alone, the programme translated these findings into a broader set of market-forming interventions designed to strengthen the wider ecosystem. These included initiatives to improve access to specialist expertise, streamline compliance requirements and strengthen the conditions needed for investment and growth across the sector.

These examples demonstrate how evidence and market intelligence can be used to inform practical interventions that address barriers to scale. By connecting analysis with implementation, such approaches help move research and demonstration towards more coherent, investable and scalable solutions.