ISLAMABAD, Nov 14 (ABC): Developing economies face mounting financing challenges as the International Renewable Energy Agency (IRENA) outlines a pathway to expand global renewable energy capacity to nearly 18.4 terawatts (TW) by 2035.
Achieving this target will require major investment in renewable power generation, electricity grids and energy storage. However, high financing costs, currency risks and limited access to capital could slow the transition in developing countries.
Under IRENA’s World Energy Transition Outlook 2026, global renewable energy capacity would increase from 5,155 gigawatts (GW) in 2025 to 18,393 GW by 2035. The agency’s 1.5°C Scenario also projects capacity reaching 38,232 GW by 2050.
Released in October, the report supports the COP30 Brazilian Presidency’s roadmap for transitioning away from fossil fuels. It outlines the scale of investment and infrastructure development needed to accelerate the global energy transition.
Global renewable capacity must expand by 1.3 TW annually
According to IRENA, achieving the 2035 renewable energy target would require average net capacity additions exceeding 1.3 TW annually between 2026 and 2035.
Solar and wind power would drive most of this expansion, reflecting their growing importance in electricity generation.
However, the required pace remains considerably higher than recent deployment levels. Global renewable energy capacity increased by a record 692 GW in 2025, according to the report.
Despite this record growth, annual additions would need to accelerate substantially to meet the proposed 2035 target.
IRENA Director-General Francesco La Camera warned that the global energy transition was facing increasing pressure.
He emphasised that simply adding renewable energy capacity to an unchanged energy system would not deliver the necessary transformation.
Instead, countries must address affordability, social protection and equitable access to economic opportunities. These measures would help maintain public support for the energy transition.
Electricity grid investment needs to reach $1 trillion annually
The IRENA outlook highlights the growing importance of electricity in the global energy system.
Under its proposed pathway, electricity would need to account for 35% of global energy use by 2035.
Moreover, annual investment in electricity grids would need to double to approximately $1 trillion.
Expanding transmission and distribution infrastructure will be essential as countries integrate larger amounts of solar and wind power.
Energy storage will also play an increasingly important role in maintaining electricity supply and managing fluctuations in renewable generation.
According to IRENA, global energy storage capacity would need to reach 2.5 TW by 2035 and 6.9 TW by 2050.
These requirements show that renewable energy expansion involves more than installing additional generation capacity.
Countries must also strengthen electricity networks, develop storage systems and improve the flexibility of their power sectors.
Renewable energy transition requires over $256 trillion investment
The financing requirements extend far beyond renewable electricity generation.
IRENA estimates that total investment under its proposed energy transition pathway would exceed $256 trillion between 2026 and 2050.
This represents approximately $78 trillion more than the investment implied by current government plans.
However, developing economies face greater difficulties mobilising the required capital.
The agency identifies high borrowing costs, currency risks and limited access to financing as major obstacles.
These challenges could restrict investment in renewable generation, electricity grids and storage infrastructure, even where countries possess substantial renewable energy resources.
Meanwhile, equipment prices have introduced additional uncertainty for renewable energy investors.
Chinese solar module prices increased by approximately 27%, rising from around $0.09 per watt at the end of December 2025 to $0.114 per watt by mid-April 2026.
The increase followed Beijing’s measures to address disorderly low-price competition among solar manufacturers.
Consequently, markets that depend heavily on imported solar panels remain sensitive to changes in equipment prices.
Pakistan needs affordable financing for grids and storage
For Pakistan, the renewable energy transition presents opportunities alongside significant financial challenges.
The country’s rapid rooftop solar expansion has demonstrated growing demand for renewable electricity. However, integrating renewables across the wider power system requires investment in transmission networks and storage.
Bilal Anwar, a global climate policy and climate finance adviser and former UNFCCC and Commonwealth official, discussed these challenges with Wealth Pakistan.
He said Pakistan’s rooftop solar growth had been remarkable, but financial constraints continued to affect renewable energy expansion.
“International climate finance remains far below needs, leaving governments to make difficult choices between energy investment, disaster recovery and essential development spending,” he said.
According to Anwar, developing economies need affordable, long-term financing to meet ambitious renewable energy targets.
Such financing must support renewable power generation, electricity grids and energy storage without worsening existing debt burdens.
For Pakistan, this means developing financial arrangements that can support clean energy infrastructure while limiting additional pressure on public finances.
Smart grids and competitive power agreements can support expansion
Dinita Setyawati, a senior energy analyst at Ember, said developing economies often face their greatest renewable energy challenges in areas with weak electricity networks.
She explained that expanding grid connections and developing energy storage could help overcome these limitations.
Moreover, flexible electricity demand could improve the ability of power systems to accommodate larger shares of renewable energy.
Setyawati also highlighted the importance of improved procurement arrangements and greater private-sector financing.
These measures could help reduce financial pressures while encouraging investment in renewable electricity infrastructure.
Discussing Pakistan, she said the rapid expansion of rooftop solar had transformed many electricity consumers into producers, commonly known as prosumers.
This development demonstrates the potential for broader renewable energy adoption across the country.
However, expanding renewable electricity at the utility scale would require competitive power purchase agreement prices.
Smart grids and adequate storage infrastructure would also be essential to support larger renewable energy projects.
“The real prize of this is clean electrification, shifting Asia’s energy systems from imported molecules to homegrown electrons,” Setyawati said.
Renewable energy investment could strengthen energy security
The IRENA outlook emphasises that electricity grids, energy storage and affordable financing must remain central to the global energy transition.
For developing economies, expanding renewable generation alone will not be sufficient.
Instead, countries need coordinated investment across power generation, transmission, distribution and storage.
They must also establish financing arrangements that make renewable energy projects commercially viable and affordable.
For import-dependent economies such as Pakistan, greater renewable energy deployment could reduce reliance on imported fuels.
Furthermore, stronger domestic renewable energy systems could improve energy security and support more affordable electricity over the longer term.
However, achieving these benefits will depend on access to investment, modern electricity infrastructure and effective energy planning.
Overall, IRENA’s proposed 18.4 TW renewable energy target highlights both the scale of the global opportunity and the financing challenges facing developing economies.
Addressing these constraints will be essential to ensuring that countries with limited financial resources can participate fully in the global clean energy transition.
