Renewable energy is growing all over the world. Solar panels, wind farms, and hydroelectric power plants are helping to make energy cleaner and better for the environment. But when it comes to emerging markets—places where the economy is still growing—some people wonder if it’s too risky to finance renewable energy there.
Let’s take a closer look at what those risks are, and why many experts believe that the rewards are worth it.
What Are Emerging Markets?
Emerging markets are countries that are not yet fully developed, but are growing quickly. These countries are often in Africa, Asia, the Middle East, or Latin America. They are building roads, schools, hospitals, and yes—new energy systems.
Many of these places still use a lot of fossil fuels like coal or diesel. But they also have great potential for clean energy. For example, many African countries have strong sunlight for solar power. Some Asian countries have good wind conditions. Others have rivers for hydropower.
That’s why many governments, businesses, and investors are looking to help these countries build renewable energy projects. But it doesn’t always go smoothly.
What Makes It Risky?
There are a few things that can make it harder or riskier to invest in renewable energy in these areas:
- Political instability: Some countries have changing governments or conflict, which can affect projects.
- Lack of infrastructure: There may not be enough roads, power lines, or ports to support large energy projects.
- Financing issues: It can be hard to get loans or insurance in some countries, especially where local banks are small.
- Currency problems: If a country’s currency loses value, it can affect how much money investors make.
- Regulations: Rules about energy and business can change quickly or be unclear.
These risks are real. But with the right planning and partners, many of them can be managed.
Why It’s Still Worth It
Even with the risks, more and more investors are moving forward with renewable energy in emerging markets. Why? Because the need is huge—and the opportunities are even bigger.
Here’s why it makes sense:
- High demand for energy: Many of these countries need more power. People want electricity for homes, schools, and businesses.
- Falling technology costs: Solar panels, batteries, and wind turbines are cheaper than ever.
- Support from global banks: Organizations like the World Bank and others often help reduce risk by backing these projects.
- Sustainability goals: Governments and companies around the world want to meet climate goals. Supporting clean energy in new markets is part of that.
Real-Life Success Stories
Let’s look at a few places where renewable energy is working well in emerging markets:
- Morocco has one of the largest solar farms in the world and is now a leader in clean energy in Africa.
- India has built thousands of megawatts of solar and wind power in the last ten years, creating jobs and reducing pollution.
- Vietnam quickly scaled up solar energy, bringing in billions of dollars from investors.
These countries faced challenges, but with good planning, strong policies, and smart partners, they made real progress.
How to Reduce the Risks
If you’re an investor, company, or government agency thinking about renewable energy in emerging markets, there are smart ways to lower the risk:
- Work with trusted local partners: Local knowledge helps avoid problems.
- Use blended finance: Combine private money with public support from development banks.
- Understand the legal landscape: Know the laws and get expert advice on contracts and permits.
- Start small and scale up: Begin with a pilot project, then grow once things are running well.
The key is to be prepared. Do your homework. Plan ahead. Partner with people who know the landscape.
The Bigger Picture
Helping emerging markets grow their renewable energy systems isn’t just about making money. It’s about improving lives. Clean energy means healthier air, more stable electricity, and new jobs. It means kids can study at night, businesses can grow, and hospitals can run without blackouts.
And as the world faces climate change, we all need to work together—rich countries, poor countries, everyone—to make the switch to clean power.
Final Thoughts
So, is it too risky to finance renewable energy in emerging markets? The answer depends on how you approach it. Yes, there are risks. But there are also huge rewards—for investors, communities, and the planet.With smart strategies and the right partners, these projects can succeed. That’s why companies like Global Infrastructure Advisors are focused on helping projects in these regions grow, succeed, and change lives for the better.