Development finance institutions are playing an increasingly important role in mobilising private investment and reducing financial risks for renewable energy projects in emerging markets, according to a new report from Abu Dhabi Fund for Development (ADFD).
The publication, Investing in a Sustainable Future: ADFD’s Climate Initiatives, examines how blended finance, concessional funding and international partnerships can help overcome investment barriers and accelerate the delivery of clean energy infrastructure.
The report highlights ADFD-backed financing initiatives supporting renewable energy development across Africa, Asia, Latin America, the Caribbean, the Pacific and Central Asia.
It comes against an estimated global investment requirement of $7.6 trillion annually through 2030 to support the transition towards a net-zero, climate-resilient economy.
Renewable energy financing supports 26 projects
The report examines ADFD’s climate finance activities over the past decade, including its partnership with the International Renewable Energy Agency (IRENA).
Under the arrangement, ADFD provides concessional sovereign-backed financing and project funding, while IRENA contributes technical expertise covering project identification, screening, due diligence and international coordination.
The partnership has mobilised approximately $350 million across 26 renewable energy projects, with an estimated 4.5 million people benefiting from the investments.
The model is intended to address challenges faced by renewable energy developers in emerging markets, where access to affordable long-term finance and the perceived risks associated with infrastructure investment can constrain project development.
By combining financing with technical assessment and project preparation, the partnership seeks to improve the viability of renewable energy investments and support their progression towards implementation.
Energy Transition Accelerator attracts $4bn in pledges
Another focus of the publication is the Energy Transition Accelerator Financing Platform (ETAF), which brings together development banks, commercial lenders, asset managers, insurers, renewable energy developers and project operators.
The platform connects potential renewable energy investments with financing partners, risk-reduction mechanisms and technical assistance.
Since its launch, ETAF has mobilised more than $4 billion in funding pledges and supported 92 projects representing 6.2GW of potential installed renewable energy capacity.
The figures highlight the scale of the project pipeline being developed through collaborative financing arrangements, although funding pledges and potential generation capacity do not necessarily represent completed investments or operational infrastructure.
The report identifies project bankability as an important factor in attracting private capital, with financing mechanisms designed to reduce risk and improve the ability of projects to secure investment.
$1.5bn IFC partnership targets climate and food security
ADFD also highlights its $1.5 billion cooperation framework with the International Finance Corporation (IFC), which supports climate and food security priorities while seeking to increase private sector investment.
The framework aims to reduce reliance on public debt financing by combining development finance resources with private capital.
Renewable energy company Masdar plays an implementation role across projects in Togo, Uzbekistan and Azerbaijan, alongside regional programmes in the Pacific and Caribbean.
These arrangements form part of ADFD’s wider approach to financing development through bilateral cooperation, multilateral partnerships, regional funds and private sector engagement.
The report argues that financing structures involving multiple institutions can help distribute investment risk while providing the long-term capital needed for infrastructure delivery.
Greater collaboration needed to close investment gap
Mohamed Saif Al Suwaidi, Director General of Abu Dhabi Fund for Development, said innovative financing mechanisms and international partnerships were becoming increasingly important as developing economies seek to expand energy access while responding to climate change.
“Climate action and sustainable development are inseparable,” he said.
“As developing countries seek to meet rising energy demand while strengthening resilience to climate change, innovative financing mechanisms and effective partnerships have become increasingly critical.”
He said the publication draws on more than a decade of ADFD’s climate-focused investments and partnerships.
Looking ahead, the report calls for closer cooperation between governments, development finance institutions, institutional investors, multilateral organisations and technology providers.
It identifies blended finance as an important mechanism for increasing the availability of capital and supporting renewable energy projects that might otherwise struggle to secure commercial funding.
For project developers and delivery organisations, the findings highlight the importance of integrating financing, technical due diligence and risk management during project preparation.
The report concludes that strengthening these arrangements will be essential to expanding the pipeline of financially viable renewable energy projects and translating international climate investment commitments into delivered infrastructure.
