SDG 7 – Affordable and clean energy

Many households in developing countries still use manure or wood as fuel for their stoves and ovens. As many as 2.1 billion people (a good quarter of the world's population) do not have access to environmentally friendly cooking technologies. In the interests of climate protection, it is vital that a switch to other energy sources takes place. However, it is not only private households that need energy; a reliable electricity supply is also essential for the economy. Energy poverty is particularly prevalent in Sub-Saharan Africa, especially in rural areas.

To avoid transporting energy over long distances, decentralised solutions in particular are the way forward here: the IEA estimates that by 2030, more than half of rural energy supply in Africa will be generated decentrally.

On behalf of the German Federal Government, KfW is supporting the promotion of access to energy, particularly in Sub-Saharan Africa. It is involved in both off-grid projects such as solar home systems and island networks as well as on-grid projects, where existing networks are expanded and consolidated. KfW projects provide more people with grid-connected energy access by feeding solar and wind-generated electricity into the grid.

In southern Africa and on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ), for example, it 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. However, much more importantly, their extraction and production emit large amounts of climate-damaging greenhouse gases. In order to achieve the 1.5 degree target, the growing energy demand must be met from climate-friendly sources – renewable energies are indispensable in today’s energy landscape. These resources – such as sunlight, wind, water, waves, biomass and heat energy stored in the earth – have the advantage that they are available everywhere in one form or another. The potential is enormous, especially in developing countries and emerging economies – all there is left to do is tap into it.

Technologies for a sustainable transformation of the energy sector and industry also include the use of hydrogen when it is produced with renewable electricity – this is referred to as renewable or green hydrogen. Power to X technologies, which convert wind or solar power into other energy sources that can be used, for example in the chemical and steel industries, are gaining in prominence.

On behalf of the German Federal Government, KfW is supporting its partner countries in using this as of yet 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 on behalf of the BMZ. It has also supported the construction of the first solar power plant in Côte d'Ivoire together with the EU and on behalf of the BMZ. It supplies electricity for up to 35,000 households.

KfW also provided funds 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. All the individual components of the solar complex together save around 800,000 tonnes of CO₂ per year. Together with other donors, KfW has been supporting the Kenyan energy sector for more than 20 years and is primarily promoting the building 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.

The most climate-friendly energy is the energy that is not consumed. Smart use of energy therefore relies on saving energy and greater energy efficiency. There is no energy source that can rival the smart use of energy. Lower energy consumption means lower costs and fewer greenhouse gases. Therefore, increased efficiency is regarded as the primary and most important energy supplier ("first fuel") when switching to a climate-friendly electricity supply. To achieve the goal of net zero emissions by 2050 and thereby limit global warming to 1.5 degrees, three times more investment in higher energy efficiency is required.

Energy can be saved in all areas, including mobility, buildings, the economy and public services. For example, in a green city, people would largely only travel short distances. The city would also promote non-motorised transport, save water and cool its buildings in a climate friendly way.

In addition to investments in more efficient electricity systems in several partner countries, KfW is also promoting a whole range of efficiency projects. For example, on behalf of the German Federal Government, it is working with the French development bank Agence Française de Développement (AFD) to support energy-efficient, social housing construction in Peru. In Mexico, KfW promotes the energy efficiency of small businesses, which are considered an important pillar of the economy. KfW is also supporting its partners in political reform processes and is promoting the expansion of local public transport in Peru for example.

Many buildings in south-east Europe do not yet meet modern energy standards. At the same time, the building sector accounts for up to 40% of energy consumption in the Western Balkan states. KfW is therefore providing funds in the Western Balkans to enable municipalities, companies and public utilities to invest in environmental measures. The projects pursue a holistic approach in which energy efficiency is increased, living comfort is improved and the life cycle of the buildings is substantially extended.

A huge effort is needed to make grids and storage systems fit for the requirements of climate protection and renewable energies. Many outdated networks still exist, causing unnecessary energy losses. In addition, energy from these sources is often generated in places other than where it is needed. This makes it essential to expand the network infrastructure.

For several years now, KfW has been promoting the building and expansion of power lines in India, known as “green corridors”. They transport sustainably generated electricity to the country’s economic centres, on a gigantic scale: EUR 1.4 billion in loans have now been granted for the project. KfW was already involved in financing 7,800 kilometres of power lines and almost 100 transformer stations in the first phase. The second phase comprises the financing of a further 2,800 kilometres of power lines and 35 transformer stations.

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, whenever it is needed. For example, KfW is supporting NamPower, Namibia’s state energy supplier, in installing a state-of-the-art battery storage system to compensate for power bottlenecks and better manage the overall system with financing amounting to EUR 20 million.

Digitalisation makes the electricity grid more robust, more cost-effective and more environmentally friendly. It does this by enabling grid monitoring and management in real time and in doing so, contributes to energy efficiency. Power outages can be responded to more quickly. Digital solutions also make it easier to integrate renewable energies into existing networks.

KfW Development Bank supports many partner governments in using modern and innovative technologies in the energy sector. In Tunisia, for example, KfW is helping to set up a technology centre to consolidate Tunisian utility company STEG's competencies in the smart grids sector. In Bangladesh, the population is growing and the economy is expanding, which is increasing the demand for energy. Digital approaches help to meet this demand efficiently. On behalf of the Federal Ministry for Economic Cooperation and Development, KfW is supporting the modernisation of the electricity grid infrastructure, which will result in reduced disruptions. In turn, this will reduce greenhouse gas emissions, as previously diesel generators and other climate-damaging solutions were frequently used in the event of grid outages.

Inadequate access to electricity and frequent power cuts are also part of everyday life in the Democratic Republic of Congo. KfW has therefore financed the rehabilitation of a substation on behalf of the BMZ, which also included the modernisation and digitalisation of the control system.