Energy

In order to develop the global energy supply in a sustainable manner and to bring it into line with climate objectives, the use of fossil fuels must be curtailed alongside a parallel increase in the use of renewable energy. Reserves of coal and oil are diminishing, while their use also has negative consequences for the environment and our climate. For various reasons, developing and emerging countries have so far tapped only a small part of their potential in the field of renewable energy: sometimes the legal infrastructure is lacking, other times the wrong tariff structures or subsidies for fossil energies prevent the emergence of a fair market for regenerative energies. Project developers, investors, local banks and political decision-makers also frequently lack necessary know-how.

All told, this means that developing countries still have a lot of catching up to do in terms of creating modern energy supplies - lust but not least due to the Paris climate accord and the so called "nationally determined contributions". IAlso because the untapped potential for renewables is still very large in most developing nations. n Africa, for example, estimates suggest that 90 % of the available hydropower is still unused. Theoretically, this alone would be enough to supply the entire continent with electricity. Developing such potential and covering an increasing amount of the growing demand with eco-friendly energy is a key objective of KfW's work around the world. In 2016 alone it disbursed grants and loans for these purposes amounting to roughly EUR 1.2 billion, thus slightly ramping up the level of its commitment for projects related to solar energy, wind and hydro power, bioenergy and geothermal energy. Including the domestic promotional business, the KfW Group is one of the largest financers of renewable energy in the world.

Renewable energy in detail

Even in well-organised and highly developed countries, only part of the primary energy converted is actually used. Between one half and two thirds is left unused because of conversion, storage and distribution losses. This balance is much poorer in many developing countries and the specific energy consumption per unit of gross national product (energy intensity) is usually considerably higher than the energy consumption of industrialised countries. Conversely, the impact of energy efficiency is still underestimated, despite its very high potential, especially in emerging and developing countries where roughly 60 % of the comparatively easy gains in efficiency could be achieved.

In light of the massive opportunities linked to energy efficiency, the International Energy Agency (IEA) no longer just talks about "hidden fuel", but about the "world´s first fuel", the most important energy source in the world. This is why doubling the rate of efficiency gains by 2030 is one of the three most important objectives of the international community in the energy sector. Greater efficiency reduces costs, raises the competitiveness of a country, strengthens the consumer climate and leads to higher growth. The latter factor is crucial in order to continue reducing poverty. The IEA describes energy efficiency as the most economical option just now and the biggest opportunity to lower carbon dioxide emissions.

On behalf of the German Federal Government, KfW promotes a whole host of efficiency projects in its partner countries, targeting both supply and demand. It supports measures in the building sector, in industry and for households that range from simple electric devices to complex technical solutions. KfW frequently works here with credit lines provided by local financial institutions for investment into energy-efficient products or buildings. One example is Mexico, where together with the national development bank and the energy efficiency authority KfW facilitated the replacement of 1.9 "power-guzzling" refrigerators with more modern equipment. But it also helps to modernise power plants or transmission lines and thereby increases their efficiency.

Current topics - energy efficiency  (PDF, 240 KB, non-accessible)

Approximately 1.2 billion people have no access to modern electricity supply, while more than twice this number has to rely on ever-dwindling traditional sources of biomass energy, like wood or manure, for cooking and heating. This has dramatic consequences not only for the health of women and children, but also for future prospects in general: modern energy is indispensable for households, social institutions like hospitals or schools and for productive purposes with a view to improving the living standards of those affected.

As part of the "Sustainable Energy for All" initiative launched by the United Nations, the German Federal Government is committed to providing access to modern energy for another 100 million people by 2030. KfW´s commitments in 2016 alone helped 2.6 million people to get access to modern energy for the first times in their lives; and a multitude of those got their energy supply substantially improved. Furthermore, KfW is heavily involved in international discussions on measuring energy access.

KfW Development Bank has focused on the electricity sector as a priority area. In this context the bank supports traditional "access projects" such as solar home systems, stand-alone grids and grid expansions. But KfW also ensures the grids have more electricity available via integrated generation and efficiency projects. This is designed to ensure that electricity is also supplied to households where, despite being connected to the grid, system shutdowns in the past meant that they were essentially deprived of the power they needed.

In the West Nile region of Uganda, for example, KfW is implementing an access project. The bank is helping to increase the electricity generation capacity, improve transmission to the isolated grid and establish new connections, so that 60,000 people and 40 commercial areas will have reliable access to electricity for the first time. The measures are being supported by projects of other development partners with a view to accelerating the pace of development throughout the entire region.

Current topics - access to energy

The percentage of renewable energy in power generation is growing rapidly virtually all around the world. This means that the power supply systems and power station need to be adapted — both in industrial and developing countries. One reason is the fluctuation in supply offered by renewable energy such as solar and wind energy, which rely upon the weather. Furthermore, electricity often cannot be produced in those places where it is needed most urgently. Therefore, this requires a substantial level of investment in energy storage and energy grids. An improved integration contributes towards balancing certain location-specific meteorological conditions across different regions. Moreover, it enables different types of storage power stations to be connected. This includes batteries for smaller power stations (such as decentralised photovoltaic systems), and, on a larger scale, pumped-storage power stations and compressed air storage. These stabilise the network despite generation fluctuations and ensure that power is available in the required quantity and quality. Both, large-scale and small-scale solutions can be envisaged. One possibility is, for example, the use of Norwegian pumped-storage power stations as "Europe's battery". Its underwater connection to the rest of the European power grid is set to become one of the main pillars of a modern energy supply model.

Working on behalf of the German government, KfW Development Bank is actively shaping the future of modern energy systems and energy infrastructure around the world. A small selection of projects can be used to illustrate this: in Bosnia and Herzegovina, KfW Development Bank is financing a pumped-storage power station in Vrilo and thus contributing towards reliable power supply in the region. In South Africa, KfW is promoting a transmission infrastructure project connecting a pumped-storage power station to the existing grid so that it can be brought on line. In India, KfW is supporting the construction of "green energy corridors", by co-financing transmission lines and substations for transporting sustainably-generated electricity from remote regions to the centres of consumption. KfW is providing financial resources for the emerging "Caucasus energy network" in order to link the supply systems from Armenia and Georgia and form a regionally interconnected grid. The support from KfW is based not least upon the recognition that cooperation in the energy sector between neighbouring states can, in case of doubt, also serve as a starting point for more extensive collaboration in other areas.

India Green Corridors