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High Impact Investment in clean energy

Currently, clean energy projects are built where large amounts of capital are already readily available. But places that can afford clean energy are not often the places where installing clean energy has the highest economic or environmental returns. For example, installing solar in Seattle (the 8th richest city in the US) doesn’t have large economic or environmental benefits since utilities already provide cheap and clean electricity (over 90% comes from cheap hydropower). Installing solar in countries in Africa, on the other hand, would have an outsized effect (and a greater ROI), given that Africa has twice the solar irradiance of the U.S. and is almost entirely powered by imported and expensive dirty fuels, like kerosene.

This suggests that most of the capital that goes into clean energy today is invested suboptimally. Where is the optimal location to invest in clean energy?

Emissions data alone isn’t a great indication for determining optimal locations for clean energy, because major economies naturally lead in total carbon dioxide emissions. Less developed nations, which lack robust and power-hungry infrastructure, will naturally be the lowest contributors to carbon dioxide emissions. This also says nothing of the policies in the country that enable clean energy.

For example, when locations are compared by total emissions (Figure 1), the top emitters are China, the United States, India, Russia, and Japan. However, sanctions prevent most Western companies from operating in Russia, and the Chinese energy sector remains closed to international investors. When locations are compared by emissions per capita, the highest emission sources are in the Middle East, with the top emitters Qatar, Kuwait, Bahrain, United Arab Emirates, and Saudi Arabia. But while these countries have high solar irradiances and have great potential for carbon impact by installing renewables (given that these locations have low clean energy penetration, at less than 1% of electricity), these countries lack solar development experience and the political will to deploy clean energy. The electricity sector is owned by state monopolies, and fossil-fuels are heavily subsidized.

Figure 1: Annual carbon dioxide emissions, thousands of tonnes (EDGAR database)
It’s necessary to consider a variety of factors in determining clean energy investments that maximize high potential impact, as well as high return. These factors include the country’s clean energy policies and power sector structure, the existence of a strong local clean energy regulatory environment, 10-year demand growth projections, and average electricity prices, among others. The following are just a handful of the countries that appear as the most promising for clean energy investments.

Primary Markets


India is one of the most promising markets for clean energy deployment. Policy support is strong, with renewables growing from nearly 0% to 20% of installed capacity in the last decade, and plans for 40% by 2030. Clean energy investments in India can have a great environmental impact, given that coal makes up 60% of the electricity share (for comparison, the US coal share is 30%).

However, competition among power providers is very high in India, and electricity prices are some of the lowest. Thus, in order to enter this market, it is important to carefullly select projects to maximize returns. There is also the continued challenge of land acquisition and transmission connectivity for solar projects. It is important to work with well-connected platforms that have relationships with developers in the market who will be able to source projects reliably and efficiently.


Solar energy is important for the future of the Philippines. Because the country is far from the sources of its imported fuels, and economies of scale are hindered because the Philippines is made up of more than 7,000 islands, electricity is among the most expensive in Southeast Asia. Distributed energy is necessary. Similar to other countries in Southeast Asia, clean energy can have a great environmental impact, given that coal makes up 52% of the electricity share.

To date, foreign investments using traditional equity financing models have been limited, given that the government allows no more than 40% foreign ownership in projects. Thus, loan or debt models are the preferred methods. Additionally, the current feed-in-tariff program for renewables has already reached the planned capacity. Thus, behind-the-meter assets are to be prioritized, over utility-scale projects that require a permitting process that involves government agencies.


Foreign investments in Thailand are promising, given that the electricity market is very stable, with no known defaults by the state utility. The grid in Thailand is also robust, with only a few instances of supply interruptions. Similar to other countries in Southeast Asia, Thailand has a very dirty electrical grid, with natural gas and coal accounting for 88.7% of power generation.

There is currently a halt on utility-scale projects. Thus, behind-the-meter assets are to be prioritized.


Chile is the most promising country in South America for clean energy investments. Aided by a strong policy environment, Chile has rapidly integrated clean energy into its electricity sector, growing wind and solar from virtually nothing 5 years ago to 9.4% of power generation today. The country is further targetting 60% by 2035. While 54% of electricity is still generated from fossil fuel plants, in 2018, coal asset owners signed an agreement committing to not invest in new coal plants.

The main barrier for renewables development remains insufficient interconnection between the country's two main power systems, the northern SING sub-system, and the central SIC sub-system. Until the interconnection system is improved, distributed solar+battery assets will need to be developed.


Clean energy development in Rwanda is promising, given that electricity prices in Rwanda are among the highest in East Africa, and concessional finance for solar projects are readily available. The country has developed utility reforms and favorable tax regimes that have made Rwanda very attractive to private-sector players. While Rwanda’s electricity composition is based heavily on hydro (at over 50% in 2017), with the increasing frequency of droughts, the country is looking to expand into solar.

However, as a rapidly industrializing country, Rwanda faces many of the risks of other emerging markets -- for example, the country sees high variations in local currencies. Given that capacity-based pricing exposes assets to currency risk, it is better to invest with dollar-denominated loans. Given also that PPAs and other agreements are not yet standardized in Rwanda, it is necessary to work with experienced local development firms. Additionally, the national utility has halted all permitting for on-grid generation projects due to oversupply. Thus, off-grid investments must be targeted.

Secondary Markets

Other markets that are strong investment locations for optimal impact include Kenya, Mexico, Brazil, Jordan, Australia, and the Caribbean Islands.