The transition to sustainable energy abroad creates a number of opportunities for businesses

Energy provision for all: socially just and green

Emerging and developing countries play a key role in the global energy transition. Not only do these countries have plenty of space, wind and sun, but they also meet all requirements needed to significantly expand green energy. In Africa, for instance, the potential for generating renewable energies is a thousand times greater than the forecasted electricity requirements for the year 2040. However, Africa has some catching up to do, as 70 per cent of its electricity supply still comes from fossil fuels. And in some states of Sub-Saharan Africa, less than half of all households have access to electricity. Analysis of the situation in Latin America also shows that most of its energy still comes from fossil fuels.

This presents German companies with numerous opportunities. Technologies and know-how for climate-friendly energy solutions “made in Germany” are in demand worldwide. They can also drive sustainable local development by creating jobs and new perspectives for local communities. On this Spotlight page, you can find out more about how the Federal Government and, in particular, the Federal Ministry for Economic Cooperation and Development (BMZ) support companies who want to play a role in the socio-ecological energy transition and set up business in developing and emerging countries.

Excellent conditions for energy investments

The restructuring of worldwide energy systems is the pressing task of our century. As global greenhouse gas emissions continue to rise, new green energy and efficiency projects must be initiated and implemented, technologies must be enhanced, and grids extended. At the same time, it is essential to build an energy infrastructure that is reliable and robust enough to guarantee energy supply even when there is no wind, at night and in the face of global threats.

Renewable energies have huge potential. Calculations show that together, sun, wind, water, geothermal power and biomass provide a thousandfold more energy than the global population needs. And although the use of renewable energy sources has risen considerably in recent years, almost 80 per cent of the energy required globally still comes from climate-damaging fossil fuels. 

What the energy transition needs are simple, robust and cross-sector solutions – and Germany’s GreenTech sector meets these requirements. This has created a high demand internationally for GreenTech products and solutions “made in Germany”. Studies clearly show that the sector has enormous worldwide potential, estimating a global market volume of up to 9.38 trillion euros by 2030, which means an annual growth rate of around 7.3 per cent. 

This gives rise to business opportunities in emerging and developing countries as well. In addition to their natural prerequisites and the current high prices for fossil energies, political decision-making at local levels is creating better framework conditions Many countries in the Global South are now looking to capitalise on the expansion of solar and wind power, hydrogen and geothermal energy. In Latin America, for example, Chile, Uruguay and Paraguay are developing national hydrogen energy strategies. Many countries have set ambitious goals. For example, Costa Rica aims to be climate-neutral by 2050 and has already had considerable successes – with the support of German companies. As a result, Costa Rica has produced more than 98 per cent purely green electricity in the past seven years [in German].

Many countries in Africa also see their future in sustainable energy. Zambia, a landlocked country in the south of the continent, has experienced a steep rise in energy demand. At the same time, hydropower, traditionally a widely-used energy source, is becoming increasingly unreliable due to climate change. To counter this, Zambia is stepping up its investments in solar power [in German]. The government is supporting the construction of larger grid-connected plants with funding from the GeT Fit Programme [in German]. The low rate of access to electricity also presents business opportunities, as it creates demand for the installation of decentralised mini grids in rural areas. In addition, German companies and their products are very positively perceived in Zambia.

Development cooperation as a driver of local innovations

The transition process in emerging and developing countries is supported by global development cooperation. Businesses that participate in the socially just energy transition can also profit from the sometimes-enormous investment volumes and from a diverse range of cooperation projects.

Since the outbreak of the Corona pandemic, the eight largest development banks have earmarked more than 13 billion euros for renewable energies. And, in the next five years, the German Kreditanstalt für Wiederaufbau (KfW) will invest an additional 100 billion euros in the global energy transition.

Funding and financing energy transition projects

Businesses that are interested in playing a role in the energy transition or have specific projects in mind can receive support from the Federal Government through a wide range of funding and financing options. You can find an overview of these offers in the Developing Countries Funding and Financing Database [in German]. A range of options is available through development cooperation, foreign trade promotion by federal and state governments, or from the EU and multinational institutions.

The BMZ also operates a broad-based funding programme called develoPPP. By regularly hosting an ideas competition, it offers financial and expert support with volumes of up to 2 million euros to businesses that want to become involved in sustainable projects in developing and emerging countries. From 2019 to 2021 alone, more than 180 environmental and climate-related projects in 50 countries received funding via the develoPPP programme. The total project volume of the businesses that received support amounted to 176 million euros. Other programmes strongly linked to climate and energy projects include the German Energy Solutions Initiative, the international climate-protection initiative (IKI), GET.invest.eu, the Special Renewable Energies Initiative, the PtX platform and AfricaConnect. 

Operating in the growth markets of developing and emerging countries is a challenge for many medium-sized enterprises, as the economic and political risks are often perceived as being too high. The Agency for Business and Economic Development (AWE) helps businesses to assess the risks more accurately and introduces them to the many opportunities for support that are available – whether through funding, financial solutions or by making use of local networks.

How local communities benefit

The involvement of German business in emerging and developing countries and their investments in green technologies go towards creating better living conditions for the local communities. In addition to generating value locally, sustainable ecosystems can be built up in areas such as training, supply or transport. This enables businesses to contribute their know-how and to profit from these kinds of partnerships. The transformation provides opportunities for investment and trade, generates employment and protects the environment. Additionally, the transformation process creates jobs in the new sectors that emerge from the use of renewable energies. Studies forecast that Africa, for example, will experience a threefold increase in the potential for employment in the renewable energies sector. 

Numerous projects relevant to development policy have already been implemented with German political support: