Multilateral Development Banks’ Clean Electricity Finance

We found that these investments grew by an annual average rate of 32 percent from 2021 to 2024—a 129 percent increase (see figure 1). With a 37 percent increase in 2024 investments, $7.1 billion more in financing went to clean electricity technologies than in the previous year.

Overall, climate finance from MDBs grew during this period, with the total finance for clean electricity rising as well. In 2024, 31 percent of total MDB climate finance went to these areas, rising from around 22 percent in 2021*.  

One can also see an increase in the number of electricity sector projects that included a specific renewable electricity, transmission and distribution, energy storage, or energy efficiency component (see figure 2). In 2024, there were 271 electricity sector investments with 68 percent explicitly including components for renewable electricity, 36 percent for transmission and distribution, 16 percent for energy storage, and 17 percent for energy efficiency. And many investments combined multiple components, such as renewable electricity plus storage, transmission and distribution combined with a renewable electricity project, renewables plus energy efficiency, or a mix.

Investments in renewable electricity like wind and solar increased by 344 percent from 2021–2024, reaching above $10.2 billion in 2024. These investments saw a rapid rise with a yearly 64 percent on average increase. Solar received the largest share of investments, with about $5.5 billion in 2024. Around $1.9 billion was invested in wind in 2024, with onshore wind receiving 72 percent of the investments. Renewable electricity investments with a mixed portfolio (e.g., combined wind and solar or general renewables support) received $1.6 billion; geothermal and small hydropower made up the remainder (see figure 3).

Since renewable electricity is a component of many investments and often mixed with other technologies (e.g., energy storage or transmission and distribution), it is important to also look at the number of projects that included these technologies. In 2024, 178 projects (66 percent of total electricity investments) included a specific renewable electricity deployment component; 94 investments included solar; 29 for wind; and 45 for a mixed set of renewables, with geothermal and small hydropower utilized in a smaller amount of investments. And the number of projects deploying one of these renewable electricity technologies has been growing over time (see figure 4).

MDBs have long invested in efforts to improve the electricity transmission and distribution system through investments such as expanding or upgrading the electricity grid, installing smart meters, or improving electricity distribution companies. Now, these investments are increasingly important to connect renewable electricity sites to the grid and ensure the grid can handle a larger penetration of renewables. From 2021–2024, MDBs invested more than $20.7 billion in the transmission and distribution system, with an average annual growth rate of 19 percent. In 2024, $5.9 billion was invested in transmission and distribution. These investments account for about 20 percent of clean electricity investments in 2024, with roughly a quarter of investments going to transmission and distribution projects over the four-year period. 

Transmission and distribution investments are an important strategy for MDBs; 97 projects included them in 2024, up from 55 in 2021 (see figure 5). As a result, 36 percent of electricity sector investments included a specific strategy around improving the transmission and distribution system.

Investments in energy storage have risen in the conversation as more countries reach or plan for higher penetrations of renewable electricity, as the cost has rapidly dropped, and as more solutions are readily available for rapid deployment. MDB investments in energy storage have been smaller than in other areas—receiving around $1.4 billion from 2021–2024—with more than $500 million invested in 2024. But this masks how energy storage is a growing component of MDB clean electricity investments. In 2024, 43 investments (12 percent of total electricity investments) had an energy storage component—up from just 8 percent in 2024 (see figure 6). And combined renewable electricity plus energy storage (called RE+storage projects) is in a significant number of projects at 11 percent of investments.

Energy efficiency has long been a component of MDB energy financing to help countries and consumers save money, be more competitive, and create jobs. MDB financing of energy efficiency totaled more than $4.7 billion from 2021–2024, reaching above $2.6 billion in 2024. An additional $2.1 billion was invested in 2024 than the previous year—a more than quadruple increase. This is likely an underestimate as energy efficiency was often included in renewable projects or in broad-based support such as policy-based lending. As a result, 17 percent of total electricity projects had an energy efficiency component in 2024, with 46 projects deploying this strategy.

To meet our climate goals, countries, investors, electricity companies, and others have set four key global goals for clean electricity by 2030 to: 

• Triple renewable power capacity to at least 11,000 gigawatts (GW); (3x renewable energy)
• Increase energy storage in the power sector to 1,500 GW, from around 230 GW in 2022 (6x energy storage)
• Double the global average annual rate of energy efficiency improvements from around 2 percent to above 4 percent every year (2x energy efficiency)
• Increase grid investment by more than double from around $274 billion to above $600 billion (more than 2x grid investments) 

MDBs can and must play a critical role in helping to meet these targets. They have a base to build upon with around $26 billion invested in 2024: Renewable electricity received more than $10.2 billion; mixed investments (i.e., multiple technologies), $6.79 billion; transmission and distribution, $5.9 billion; energy efficiency, $2.6 billion; and energy storage, $0.5 billion (see figure 8). 

With MDBs committing to increase their overall climate financing to $120 billion by 2030, there is a huge scope to both increase the quantity and quality of MDB clean electricity finance to help meet the four global clean electricity deployment goals. In each of these areas, MDBs are already showing promising signs, with around $26 billion of clean electricity finance in 2024, but they need to quickly replicate the success, scale their investments, learn from each other, take more risks, and better leverage their investments for even larger impacts. It is important that MDB shareholders and leadership, clean electricity champions, and NGOs make sure that these banks continue to grow this investment.