Derisking Renewable Energy Investment
Dec 1, 2020
Derisking Renewable Energy Investment (DREI) introduces an innovative, quantitative framework to assist policymakers in developing countries to cost-effectively promote and scale-up private sector investment in renewable energy.
The DREI framework systematically identifies the barriers and associated risks which can hold back private sector investment in renewable energy. It then assists policymakers to put in place packages of targeted public interventions to address these risks. Each public intervention acts in one of three ways: either reducing, transferring or compensating for risk. The overall aim is to cost-effectively achieve a risk-return profile that catalyses private sector investment at scale. The end result is reliable, clean and affordable energy solutions in developing countries.
The DREI framework consists of a suite of publicly-available methodologies, financial tools/models and resources. Current renewable energy sectors covered by the DREI framework are (i) utility-scale, (ii) on-grid rooftop PV, (iii) off-grid mini-grids, and (iv) solar home systems.
The DREI framework periodically publishes key reports, summarizing important developments in the framework
- The original DREI Report (2013). The DREI framework was launched in 2013 with the publication of the original DREI report and financial tool, focused on utility-scale renewable energy. This feature report establishes the methodology’s theory of change, identifying the need to reduce the high financing costs for renewable energy in developing countries as a key task for policymakers acting today. The report describes in detail the various steps and concepts behind the methodology.
- DREI: Off-Grid Electrification (2018). This feature report expands the DREI framework to solar PV-battery mini-grids for off-grid electrification. The report sets out a theory of change, key concepts and methodological steps, and includes two illustrative case studies in Uttar Pradesh (India) and Kenya. This report has been officially developed in partnership with ETH Zurich.
UNDP is applying the DREI methodology in practice in its support to developing country governments. Country applications include:
- Belarus (utility-scale wind; 2017)
- Cambodia (utility-scale, on-grid rooftop, SHS, mini-grids; all solar PV; 2019)
- Kazakhstan (utility-scale wind and solar PV; 2017)
- Lebanon (utility-scale wind and solar PV; 2017)
- Tunisia (utility-scale wind and solar PV; 2014; 2018)
UNDP, collaborating with its partners, is continually further developing and refining the DREI framework.
The following resources and materials are currently available:
- Resources & Tools. UNDP has developed a suite of additional guidance materials and tools for applying the DREI framework.
- Case study exercise. UNDP has developed a case study exercise using the financial tool.
UNDP welcomes enquiries and suggestions regarding the DREI framework and financial tool. For further information, please contact DREI@undp.org