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Financing energy efficiency in developing countries--lessons learned and remaining challenges


  • Sarkar, Ashok
  • Singh, Jas


Although energy efficiency implementation is increasingly being recognized by policymakers worldwide as one of the most effective means to mitigating rising energy prices, tackling potential environmental risks, and enhancing energy security, mainstreaming its financing in developing country markets continues to be a challenge. Experience shows that converting cost-effective energy savings potential, particularly the demand-side improvement opportunities across sectors, into investments face many barriers and unforeseen transaction costs. This paper draws upon selected experiences with financing energy efficiency in developing countries to explore the key factors of various programmatic approaches and financing instruments that have been applied successfully for delivering energy efficiency solutions. Through case studies, a diverse range of institutional issues are examined related to the identification, packaging, designing, and monitoring approaches that have been used to catalyze traditional and innovative financing of energy efficiency projects. With adequate liquidity in major developing country markets and availability of modern energy savings technologies, it is often the institutional issues that become a key challenge to address in order to finance and implement robust programs. As further operational experience is gained, increased knowledge sharing can lead to scaling-up of such energy efficiency investments. The paper concludes with some ideas for accelerating implementation.

Suggested Citation

  • Sarkar, Ashok & Singh, Jas, 2010. "Financing energy efficiency in developing countries--lessons learned and remaining challenges," Energy Policy, Elsevier, vol. 38(10), pages 5560-5571, October.
  • Handle: RePEc:eee:enepol:v:38:y:2010:i:10:p:5560-5571

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    References listed on IDEAS

    1. Heffner, G. & Maurer, L. & Sarkar, A. & Wang, X., 2010. "Minding the gap: World Bank's assistance to power shortage mitigation in the developing world," Energy, Elsevier, vol. 35(4), pages 1584-1591.
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    1. Reynolds, Travis & Kolodinsky, Jane & Murray, Byron, 2012. "Consumer preferences and willingness to pay for compact fluorescent lighting: Policy implications for energy efficiency promotion in Saint Lucia," Energy Policy, Elsevier, vol. 41(C), pages 712-722.
    2. repec:eee:rensus:v:76:y:2017:i:c:p:1550-1561 is not listed on IDEAS
    3. Sarah Feron, 2016. "Sustainability of Off-Grid Photovoltaic Systems for Rural Electrification in Developing Countries: A Review," Sustainability, MDPI, Open Access Journal, vol. 8(12), pages 1-26, December.
    4. Ian Rowlands, 2011. "Ancillary impacts of energy-related climate change mitigation options in Africa’s least developed countries," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 16(7), pages 749-773, October.
    5. WenShwo Fang & Stephen M. Miller, 2013. "The effect of ESCO s on carbon dioxide emissions," Applied Economics, Taylor & Francis Journals, vol. 45(34), pages 4796-4804, December.
    6. de la Rue du Can, Stephane & Leventis, Greg & Phadke, Amol & Gopal, Anand, 2014. "Design of incentive programs for accelerating penetration of energy-efficient appliances," Energy Policy, Elsevier, vol. 72(C), pages 56-66.
    7. Fang, Wen Shwo & Miller, Stephen M. & Yeh, Chih-Chuan, 2012. "The effect of ESCOs on energy use," Energy Policy, Elsevier, vol. 51(C), pages 558-568.
    8. Chirambo, Dumisani, 2016. "Addressing the renewable energy financing gap in Africa to promote universal energy access: Integrated renewable energy financing in Malawi," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 793-803.
    9. Gottschamer, L. & Zhang, Q., 2016. "Interactions of factors impacting implementation and sustainability of renewable energy sourced electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 164-174.
    10. Sousa, José L. & Martins, António G. & Jorge, Humberto M., 2013. "World-wide non-mandatory involvement of electricity utilities in the promotion of energy efficiency and the Portuguese experience," Renewable and Sustainable Energy Reviews, Elsevier, vol. 22(C), pages 319-331.
    11. Mundaca, Luis & Mansoz, Mathilde & Neij, Lena & Timilsina, Govinda R, 2013. "Transaction costs of low-carbon technologies and policies : the diverging literature," Policy Research Working Paper Series 6565, The World Bank.
    12. Mohammed Issa Shahateet, 2014. "Modeling Economic Growth and Energy Consumption in Arab Countries: Cointegration and Causality Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 4(3), pages 349-359.
    13. Monika Papiez & Slawomir Smiech, 2013. "Economic Growth and Energy Consumption in Post-Communist Countries: a Bootstrap Panel Granger Causality Analysis," Dynamic Econometric Models, Uniwersytet Mikolaja Kopernika, vol. 13, pages 51-68.
    14. Kusaka, Wakana & Kojima, Michikazu & Watanabe, Mariko, 2012. "Environmental consciousness, economic gain and consumer choice of energy efficient appliances in Thailand, China and India," IDE Discussion Papers 345, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    15. Lampreia, João & de Araújo, Maria Silvia Muylaert & de Campos, Christiano Pires & Freitas, Marcos Aurélio V. & Rosa, Luiz Pinguelli & Solari, Renzo & Gesteira, Cláudio & Ribas, Rodrigo & Silva, Neílto, 2011. "Analyses and perspectives for Brazilian low carbon technological development in the energy sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(7), pages 3432-3444, September.
    16. Ian H. Rowlands, 2011. "Co-impacts of energy-related climate change mitigation in Africa�s least developed countries: the evidence base and research needs," GRI Working Papers 39, Grantham Research Institute on Climate Change and the Environment.
    17. Akman, Ugur & Okay, Esin & Okay, Nesrin, 2013. "Current snapshot of the Turkish ESCO market," Energy Policy, Elsevier, vol. 60(C), pages 106-115.
    18. repec:gam:jeners:v:10:y:2017:i:8:p:1172-:d:107696 is not listed on IDEAS
    19. Colenbrander, Sarah & Gouldson, Andy & Sudmant, Andrew Heshedahl & Papargyropoulou, Effie, 2015. "The economic case for low-carbon development in rapidly growing developing world cities: A case study of Palembang, Indonesia," Energy Policy, Elsevier, vol. 80(C), pages 24-35.


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