Renewable Energy Markets in Developing Countries*

Renewable energy is shifting from the fringe to the mainstream of sustainable development. Past donor efforts achieved modest results but often were not sustained or replicated, which leads now to greater market orientation. Markets for rural household lighting with solar home systems, biogas, and small hydro power have expanded through rural entrepreneurship, government programs, and donor assistance, serving millions of households. Applications in agriculture, small industry, and social services are emerging. Public programs resulted in 220 million improved biomass cook stoves. Three percent of power generation capacity is largely small hydro and biomass power, with rapid growth of wind power. Experience suggests the need for technical know-how transfer, new replicable business models, credit for rural households and entrepreneurs, regulatory frameworks and financing for private power developers, market facilitation organizations, donor assistance aimed at expanding sustainable markets, smarter subsidies, and greater attention to social benefits and income generation.