SDG 7 – Affordable and clean energy

Access to energy is much more than a technical issue – it is the key to equal opportunities and self-determination, because without it, education, health care, and economic development will be denied. For example, energy means light for learning, electricity for cold chains and driving force for local businesses. It is the foundation on which sustainable growth and social stability are built.

Energy access requires reliable and high-quality supply. Decentralised energy systems open up new perspectives here. They bring electricity to where central networks end – to remote villages, islands and rural regions. With the help of sun, wind or biomass, flexible mini- and micro-grids are created that can be operated and maintained locally. These systems create jobs, promote regional value creation and strengthen communities that have hitherto been sidelined from economic development. This makes energy a driving force for local innovation.

Battery storage systems make renewable energy available around the clock. They compensate for fluctuations, increase grid stability and enable reliable supply. Together with intelligent digital control systems, this can create new dimensions of reliable energy supply, even in conjunction with existing networks. They are changing the way energy is provided and used in remote regions. Digital platforms connect producers and consumers, make energy flows transparent and enable mobile payment and maintenance solutions. Together, storage systems, decentralised generation and digital control form the backbone of a sustainable energy infrastructure.

On behalf of the German Federal Government, KfW is supporting the promotion of energy access, particularly in Sub-Saharan Africa. It is involved in off-grid projects such as solar home systems or island grids, in batteries and storage systems, as well as on-grid projects in which existing grids are expanded and compressed.

In southern Africa and on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ), for example, KfW is involved in the Foundation for Clean Energy and Energy Inclusion for Africa (CEI Africa), which finances a decentralised, climate-friendly power supply for private households, small businesses and municipalities. The Facility for Energy Inclusion (FEI), an energy fund founded by KfW and the African Development Bank, is also pursuing a decentralised supply of renewable energies.

Fossil fuels such as petroleum, coal and natural gas are only available in limited quantities. In addition, their extraction and production emit large amounts of climate-damaging greenhouse gases. That is why sustainable energy sources must replace fossil fuels by the middle of the century at the latest. In fact, the expansion of renewables has increased sharply in recent years – also with the help of KfW. Solar and wind energy in particular are price-competitive with fossil fuels and have firmly established themselves on the world markets.

The IEA predicts that by 2030, solar capacity will more than double, and wind capacity will almost double. The main drivers are China, the European Union and Japan. But developing countries and emerging economies are also increasingly relying on renewable energies, because they can reduce their dependence on expensive oil and gas imports in addition to providing price and logistical advantages. However, additional efforts are needed to achieve the target of tripling the capacity of renewable energies by 2030, as decided at the 2023 Climate Change Conference. The current speed is not sufficient to reach this value. Rather, a strong expansion of renewable energies is still needed.

This is also important for the use of hydrogen, which opens up promising new opportunities. When hydrogen is produced with renewable electricity, it is one of the technologies that can fuel a sustainable transformation of the energy sector and industry. This is referred to as renewable or green hydrogen. Technologies known as Power to X are becoming increasingly important, for example in the chemical industry or in steel production.

On behalf of the German Federal Government, KfW is supporting its partner countries in expanding the untapped potential for the generation and use of renewable energies. For example, it is helping to build a reference plant for the production of green hydrogen in Morocco. It has also supported, together with the EU, the construction of the first solar power plant in Côte d'Ivoire. It supplies electricity for 35,000 households.

KfW also provided funding for the largest solar power plant in Africa, which was built in the Moroccan city of Ouarzazate and produces environmentally friendly electricity for 1.3 million people. KfW has been active in Kenya for more than 20 years, where it primarily promotes the construction of geothermal power plants. Geothermal energy is a renewable and almost carbon-neutral energy source that is available regardless of the season and the climate.

In Mexico, KfW helped to kick-start the photovoltaic market by providing a loan to the Mexican development bank together with other international donors. That was in 2017, and solar power is now booming there. With KfW funding, a wind farm has been built on the Red Sea that provides sustainable electricity to around 400,000 Egyptian households. And these are just a few examples from a long list.

The best energy is energy that is not consumed. A smart use of energy therefore relies on savings and greater efficiency. In order to protect the climate and achieve the net zero emissions target by 2050, energy efficiency must double by 2030. This is what the international community decided in 2023.

According to IEA calculations, energy efficiency could provide more than 70% of the projected decline in oil and about 50% of the decline in gas demand by 2030. The potential is therefore huge, but not yet sufficiently exploited. In order to make better use of the opportunities here, high investments are still needed. This is because energy can be saved in all areas, in mobility, in buildings or in the economy. A green city, for example, should have short distances, promote public and non-motorised transport, save water and cool buildings in a climate-friendly way.

KfW therefore supports various efficiency projects in addition to investments in more efficient electricity systems in several partner countries. On behalf of the German Federal Government, for example, it supports energy-efficient, social housing construction in Peru. There, it also promotes the expansion of local public transport.

In South-East Europe, many buildings do not yet meet modern energy standards. At the same time, up to 40% of energy consumption in the Western Balkans is in the buildings sector. That is why KfW is providing funds to enable municipalities, companies and public utilities to invest in environmental measures. The projects take a holistic approach that increases energy efficiency, improves living comfort and significantly extends the service life of buildings.

A huge effort is needed to make grids and storage systems fit for the requirements of climate protection and renewable energies. There are still many obsolete networks that cause unnecessary energy losses. In addition, energy from renewables is often obtained in other places than needed. This makes an expansion of the infrastructure indispensable.

The same applies to energy storage systems, from batteries to pumped storage power plants and compressed air storage systems. They are important in order to balance the volatile availability of electricity from renewable energies and to provide electricity in the required quantity and quality. After all, a lot can still be achieved with smart digital applications, both in production and, for example, with apps or "smart metres" on the consumer side. According to the IEA, the lack of electricity infrastructure is currently "the weakest link in the chain". That is why KfW is also making a start here.

For example, KfW has been supporting the building and expansion of overhead power lines in India, known as “Green Corridors”, for several years now. They bring sustainably generated electricity to the country’s economic centres, on a gigantic scale: KfW was involved in financing 7,800 kilometres of power lines and almost 100 substations in the first phase. The second phase covers a further 2,800 kilometres and 35 substations.

In terms of storage, KfW is supporting NamPower, Namibia’s state energy provider, in the construction of a state-of-the-art battery storage system to compensate for power shortages and better manage the entire system. When completed, it will be one of the largest electricity storage facilities in southern Africa.