Climate Bonds Initiative (CBI) recently published a report developed as part of the Climate Aggregation Platform (CAP), a project financed by the Global Environment Facility (GEF) and implemented by UNDP, which seeks to promote the expansion of financial aggregation for energy assets to small scale and low carbon in developing countries. It is based on an extensive review of the literature and dozens of interviews with relevant stakeholders, both from the product side and from the financial side.

The report provides insights into the current distributed renewable energy (DRE) landscape and the potential for financial aggregation to address the existing financing gap in developing countries. It explores the state of small-scale low-carbon energy in developing countries, as well as the barriers to financial aggregation, along with some proposed solutions and key considerations for market practitioners. It primarily focuses on sub-Saharan Africa, but the findings are broadly applicable to all developing regions, especially those with underdeveloped financial markets.

It is concluded that the DRE sector in developing countries is at an early stage and it may still be premature to consider financial aggregation a viable option in the vast majority of these markets. However, developed country markets experienced similar challenges but became an established asset. Therefore, developing countries can take advantage of the best practices of the most developed markets to accelerate this financial innovation.