Baku, 14 November, 2024: At COP29, the Green Grids Initiative (GGI) presented its new Climate Finance Principles to accelerate grid investment. Through these principles, the GGI aims to mobilise financing for grids, addressing the problem of lagging grid capacity, which is rapidly becoming one of the most significant barriers to renewable energy deployment and energy security.

The challenge: no transition without transmission
Grid infrastructure worldwide is struggling to keep pace with energy transition needs. With more than 3,000 GW of renewable energy projects awaiting connection, a swift scale-up of investment in grid upgrades and interconnections is essential for delivering net-zero goals. Currently, a lack of consensus on which grid projects are “green” and eligible for climate finance is limiting critical investment, co-financing, and securitisation of infrastructure enhancements. The challenge is particularly acute in fossil-fuel intensive emerging markets and developing economies (EMDEs), where the need for financing is greatest.

The opportunity: new climate finance principles for accelerating grid investments
Through its position paper, the GGI proposes 10 Climate Finance Principles to help climate investors identify contexts where grid projects would be catalytic to greening the electricity system. In so doing, the GGI advances a framework to provide an interoperable and trustworthy basis for funding projects essential to decarbonisation. Developed in partnership with public and private finance institutions, and infrastructure and climate finance experts through GGI’s Finance Working Group, the principles cover alignment with climate targets, measurable contributions to sector goals, and reporting requirements, all aimed at mobilising significant financial resources.

“Currently around 60% of grid investments in emerging and developing economies are not eligible for climate finance. This is a major problem, as this is where that support is needed most,” said Marcus Stewart, Head of Secretariat, Green Grids Initiative.
“We hope to see key financial institutions including multilateral development banks adopting our new Climate Finance Principles as the basis for defining which grid projects are eligible for climate finance in order to  mobilise critical catalytic investment in grids. As there is No Transition Without Transmission,” he added. 

“Under current classification methodologies, most grid projects in the Global South and in transition economies can’t access climate finance. The Climate Finance Principles for Green Grids are intended to provide a basis for interoperability, dialogue and trust among financiers. In turn, this will facilitate co-financing, securitization and the scale-up of investments on the global scope of grid infrastructure expansion and transformation project, subject to an effective and measurable decarbonization and sustainability performance,” said Lucia Fuselli, climate finance expert and lead author of the report. 

Call to action: join the consultation process
The GGI will open a three-month consultation on the Climate Finance Principles at a COP29 panel today, 14 November (12pm-1pm AST), at the Global Renewables Hub, where representatives from the African Development Bank, HSBC, the Swedish International Development Cooperation Agency (SIDA), and private developers will discuss the principles and their potential impact.

We need your help. The 10 Climate Finance Principles proposed will only work if they are broadly adopted by practitioners and accepted as good practice by stakeholders, including civil society.

We are calling for written feedback throughout the three-month consultation timeframe. The GGI will also run a series of Roundtable consultations and is gathering case studies of the principles in use, which demonstrate their applicability. For more information or to submit feedback please contact: secretariat@green-grids.org with “GGI Climate Finance Principles Consultation” in the subject line.