SDG 7 – Affordable and clean energy

Around one billion people have no access to modern electricity. More than twice as many people use dwindling sources of biomass such as wood or dung for cooking and heating. Modern energy is indispensable for households, social institutions such as hospitals and schools, and for businesses. It significantly improves people’s living conditions.

As part of the UN initiative Sustainable Energy for All, the German Federal Government has committed to providing access to modern forms of energy for an additional 100 million people by 2030. KfW is doing its part by promoting projects that provide more people with energy. KfW’s focus in this context is on the electricity sector. It supports access to energy through home solar energy systems, island grids or grid extensions, especially in Africa. In Indonesia, for example, it is supporting a programme to electrify remote rural regions. But KfW is also working to ensure that there is more electricity in the grids through integrated generation and efficiency projects. This will also improve the supply to households that already had a connection but experienced frequent power outages.

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The use of fossil energy sources accelerates climate change by emitting greenhouse gases. Their consumption must therefore be drastically reduced. Developing countries and emerging economies have significant potential for using renewables, but so far this potential has not been sufficiently tapped. In Africa, for example, solar and wind energy are only used to a limited extent. One of KfW’s key objectives is to harness this potential and increasingly meet the growing demand with climate-friendly forms of energy. It therefore promotes the use of renewable energy around the world.

Power-to-X technologies are gaining in importance. These are processes that convert green electricity into chemical energy sources for electricity storage, into electricity-based fuels for mobility or raw materials for the chemical industry. “Green hydrogen” is also an important medium- to long-term component in a large number of energy systems around the world. If electricity from renewable energy sources is used to split hydrogen into oxygen and hydrogen, this is called “green hydrogen”. No carbon dioxide is emitted in the process, which means that green hydrogen can make a significant contribution to achieving the Paris climate targets.

KfW, for example, is supporting Morocco in the energy sector on behalf of the German Federal Government. At present, projects with funding of around EUR 2 billion are in progress or in the pipeline. This also includes a reference facility for the use of hydrogen technology, which elevates this cooperation to a new, technologically ground-breaking level.

But solar power is also far from being used to its full extent. KfW has implemented a flagship project in Morocco that demonstrates how it can be successful. The government of the north African country is pursuing an active energy strategy: by 2020, the capacities for solar, wind, and hydropower are expected to be expanded to 2,000 MW respectively.

KfW is helping them to achieve this goal on behalf of the German Federal Government, for example by building several photovoltaic installations at the Ouarzazate site since 2016. Morocco is also planning to build a reference facility to generate green hydrogen from the electricity of a wind/solar hybrid plant with KfW’s support.

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Primary energy is insufficiently exploited in both industrialised and developing countries. A large part of the energy produced is lost during conversion, storage and transmission. This is the picture in industrialised countries; in many developing countries it looks even worse. Increasing energy efficiency therefore offers tremendous leverage.

The IEA also describes an increase in energy efficiency as the most important source of energy in the world. However, investments are needed to take advantage of this opportunity. KfW, on behalf of the German Federal Government, is promoting not only investments in more efficient electricity systems, but also a whole range of efficiency projects in partner countries. This involves reducing demand through appropriate measures in the building sector: this applies to both industry and households and aims to supply more efficient electrical appliances or even complex technical solutions. Energy consumption in the building sector is continuing to rise at the moment. Even the most efficient house needs roofs and walls that emit carbon dioxide during production. The use of sustainable and usually local building materials is therefore particularly important. KfW is promoting their use and the installation of solar and photovoltaic roof systems, for example in the Mexican EcoCasa(PDF, 180 KB, non-accessible) housing complex.

Efforts to use renewable energy are already reaping rewards. Their share of electricity generation is increasing worldwide. But the supply of electricity from solar or wind power fluctuates, depending on the time of day and the weather. In addition, energy from these sources is often generated in places other than where it is needed. This makes it necessary to expand the energy systems.

Investment in energy storage is also needed, ranging from batteries to pumped-storage power plants and compressed air storage. These provide electricity in the required quantity and quality. Working on behalf of the German Federal Government, KfW Development Bank is actively shaping the future of modern energy systems and energy infrastructure around the world. This can be illustrated by a small selection of projects: 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”(PDF, 174 KB, non-accessible) by co-financing transmission lines and substations for transporting electricity from the producer regions to the centres of consumption.

In Africa, KfW, on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ), is supporting the West African Power Pool (WAPP)(PDF, 166 KB, non-accessible) in pursuing its goal of creating a functioning regional grid infrastructure and expanding electricity generation capacities with various financing options. This support will focus on work to expand international transmission lines, large hydropower stations and solar power systems.

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