Migara Jayawardena, adjunct faculty member in SFS’ Global Human Development master’s program, is CEO/Founder of a global clean energy consulting company and a former senior staff member of the World Bank and Harvard Institute for International Development (HIID). Here, he lays out the need for development professionals to understand many perspectives in the move to renewable energy sources in developing countries.

Record high global demand for electricity and energy-related emissions have made the clean energy transition a development priority, with 85% of countries seeking to pivot away from fossil fuels while still reliably powering economic growth. Achieving this transition requires unprecedented investments to scale up renewable energy (RE), especially for solar, wind and hydropower that make up the bulk of the expansion. Estimates suggest that annual funding for RE must triple to $2-3 trillion by the 2030s. While much of this expansion is expected to occur in developing economies, surging demand from data centers and Artificial Intelligence (AI) in advanced economies is intensifying global competition for deploying such investments. 

Meeting this challenge, however, is no longer just about building renewable power plants, but rather strategically making coordinated investments in supporting infrastructure across the entire energy development chain to ensure electricity can reach consumers. This has prompted a paradigm shift in energy planning. First, electricity networks need to extend to renewable, resource-rich areas that are often far from population centers. Second, power systems need to become more flexible to accommodate intermittently available resources, such as solar and wind power, that are dependent on natural conditions (i.e. when the sun shines and the wind blows), rather than when consumers demand electricity. Global estimates suggest that such infrastructure will need to double by 2050 to meet energy and climate goals. Thus, integrating RE technologies into power systems without compromising reliability often entails additional investments in grid upgrades, storage solutions and operational reforms—each adding costs and complexity to deployment decisions. China, which now leads the world in deploying most RE technologies, faced system constraints during its expansion, causing substantial electricity losses (curtailment) before corrective action was taken.

These challenges translate to investment risks that need to be overcome to successfully navigate the transition, which requires evaluating RE projects from multiple perspectives. In the GHD program, my course, Clean Energy Investments in Developing Economies, immerses students in a professional setting in which they apply a techno-financial-economic framework designed for making risk-informed investment decisions. Drawing on my experience from a multi-decade career supporting energy investments at the World Bank and managing AMALA Clean Energy Advisors, a global energy consultancy, the course emphasizes the value of evaluating investments from multiple perspectives and the cost of misalignment across them. 

Different perspectives demand different considerations

From a project (sponsor) developer’s perspective, technical and renewable resource considerations are critical to financial viability. Ensuring projects are bankable depends on assessing and mitigating risks through contractual and other means. Inadequate evaluation of resources (e.g., inadequate measurement of solar irradiation, wind, hydrological or geothermal potential) or failure to meet industry standards means uncertainties that undermine financial performance of projects. Evidence from privately-financed wind projects supported by the World Bank shows that lower than anticipated production due to such shortcomings has been a key driver of reduced returns. Similarly, a global geothermal survey found that private sponsors typically invest only once resource availability is confirmed, mitigating a major financial risk.

From a country perspective, investments must be economically justified at the power-system level, where integration costs often arise. Not only do they add to consumer costs, but they could also decisively affect project viability. For instance, in Kenya, substantial delays in completing transmission interconnections to a wind project exposed consumers to additional costs even as contractual arrangements protected project sponsors. In other contexts, Nicaraguan wind developers faced curtailment as the system faced challenges integrating the country’s prolific wind resources, while China obliged wind developers to incorporate batteries for storage, which internalized integration costs directly into project economics. There are also benefits that extend beyond host countries, such as climate impacts, which are important considerations for securing development and climate financing that have proven to be catalytic for many RE investments.

Distributional impacts on stakeholders represent other crucial perspectives. Clean energy investments can be catalyzed or derailed depending on how costs and benefits are shared among affected communities. For example, in Laos PDR, the success of a hydropower public-private partnership was contingent on the sponsor improving the livelihoods of nearby communities who would have otherwise faced adverse impacts, while in Mongolia, private vendors accelerated electrification among nomadic herders by selling solar photovoltaic (PV) kits, which they saw as a path to expanding the market for their products.  

Tomorrow’s practitioners need “integrator skills”

Ultimately, effective investment decisions for collectively formulating cohesive, inter-dependent solutions demand multi-disciplinary skills that integrate technical, financial, economic, policy, environmental and social considerations. In my advisory work helping public and private clients navigate the energy transition, I draw on knowledge from experts specializing in different disciplines, which is reinforced by my experiences training development professionals at organizations such as the Harvard Institute for International Development (HIID) and managing leadership recruitment at the World Bank.

Given the growing demand for what are often described as “integrator skills,” I encourage my students to not only deepen skills within their area of specialization, but to also expand their toolkit to understanding the linkages across a broader set of strategic perspectives supported by rigorous analytics so they can make better-informed development decisions. As the clean energy transition reshapes the landscape, I believe that this integrative capability is becoming non-negotiable for forming and recruiting professionals working at the intersection of investments and development.