Energy & climate

Access to energy is regarded as the second most important constraint to development of businesses in low-income countries. Contributing to increased supply and access to stable clean electricity is therefore a key priority for Norfund.

Malindi, Kenya

Results 2021*


new generation capacity financed


tonnes of CO2 avoided


electricity produces


new households gained access to electricity<br>

Norfund’s investments in renewable energy contributes directly to the achievement of the Sustainable Development Goal no. 7 – “Ensure access to affordable, reliable, sustainable and modern energy for all”.

Norfund’s climate position

Norfund’s climate position outlines how Norfund will assess and address climate change going forward. The position has four main themes with related actions and targets:

  1. Investing in climate solutions
  2. Integrating climate across investments
  3. Avoiding fossil risk
  4. Building climate resilience

The European Development Finance Institutions (EDFI), which includes Norfund, have also outlined joint ambitions for Climate actions that are aligned with the Paris Agreement and have high disclosure standards.

The challenge

Efforts to promote growth and reduce poverty are hampered by a lack of reliable electricity. One billion people – mostly concentrated in Sub-Saharan Africa and South Asia – live without access to electricity (World Bank, 2018).

Lack of access to energy is a key constraint for businesses in low-income countries.

Clean, reliable and affordable energy is essential for business activity and job creation and helps mitigate climate change.


people live without electricity – mostly in Africa and South Asia


of businesses in Sub-Saharan Africa experience electrical outages

The power sector in most low-income countries is largely underdeveloped in terms of installed capacity, access to energy, and per capita consumption. The growing demand cannot be met, and unreliable energy supply makes many industries in low-income countries un-competitive. The low capacity and the many power shortages restrain economic growth and job creation.

Increased energy access is needed, but the expansion of fossil fuel energy production in power plants and households contributes to climate change, health issues and other hazards. Many low-income countries have considerable domestic hydro, wind and solar resources. Utilising these resources is essential in meeting the rising demand and containing greenhouse gas emissions. 

Norfund contributes to improving access to reliable energy by investing in electricity generation where the need for capital is large.

Impact from Norfund’s investments in renewable energy

Renewable Energy’s impact objective is threefold;

  • increasing the supply of energy
  • increasing the share of energy from renewable sources
  • increasing access to energy

Expanding the supply of and access to clean energy promotes both commercial activity and social development, while at the same time avoiding the negative effects on climate and health. This leads to economic growth, job creation, and improved living standards.


total capacity in portfolio 2021*


of which renewable

In addition to providing funding, Norfund, as an active owner, contributes with advice regarding environmental, social and governance aspects, helping to mobilise expertise and other sources of finance. This contributes to increased energy generation, lower energy prices, direct and indirect job creation, avoidance of CO2 emissions and finally to economic growth and improved living standards.

The figure below illustrates the “Theory of change” model which describes the relationship between the input Norfund provides to clients, the SDG targets, and the overall impact we want to achieve. The theory of change also highlights other relevant effects of our investments.

Reducing greenhouse gas emissions

Energy production and consumption are enablers of development, but they are also major contributors to climate change. Energy production accounts for about 60 percent of global greenhouse gas emissions.

Populations and energy consumption in low-income countries are increasing. Higher emissions from these countries are inevitable, though starting from a low level. We also know that many developing countries are particularly vulnerable to the effects of climate change. If the universally agreed target of keeping global warming to less than 2°C is to be met, much of the new energy capacity will need to come from clean energy sources. Hence, large investments in renewable energy will be required.

It is estimated that eliminating the use of coal over the next 20 years can achieve 80 percent of the required energy sector emission reductions globally (Global Commission on the Economy and Climate). This is one of the reasons why almost 50% of Norfund’s portfolio is in the clean energy sector.

Many renewable technologies such as wind and solar power have variable production and are dependent on the weather. To stabilize the grid, other reserve and balancing power sources are required as a supplement. Natural gas is a domestic resource in many African countries and has a low carbon footprint compared to other fossil energy sources. Norfund therefore includes natural gas as a supplementary element within our clean energy portfolio.

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