By Abiodun Salako
Introduction
In the global pursuit of a net-zero future, solar and wind deployment is accelerating rapidly. Global renewable power capacity is projected to increase by almost 4,600 GW between 2025 and 2030, a figure that’s equal to the combined current power of China, the EU, and Japan, according to the International Energy Agency (IEA). On the other hand, this increasing uptake is running into a structural wall: the inherent limitations of aging or underdeveloped electricity grids, particularly in the Global South.
As countries in these regions expand renewable generation, Battery Energy Storage Systems (BESS) are emerging as the ‘grid anchor’ needed to convert intermittent solar and wind into reliable, 24/7 power supply and maintain grid stability. With battery costs having fallen by 90% over the past 15 years, BESS is becoming more financially viable. But significant investment is still required to better link up how much energy we produce with how much people need, and to build strong, low-carbon power systems. McKinsey estimates the global BESS market could reach $120–150 billion by 2030, evident from both the scale of opportunity and the speed at which storage is becoming central to energy systems. Although still nascent in many emerging markets, BESS is nothing short of instrumental in powering development, advancing the energy transition, and strengthening climate resilience in the Global South.
BESS and the energy access gap
Energy access is a central development issue for any country and even more so for the Global South. 92% of the global population now has access to electricity and approximately 666 million people are without. But, 85% of those without access reside in Sub-Saharan Africa. Even where access exists, reliability is often the greater hurdle. In many low- and middle-income countries, the grid suffers from frequent outages, forcing businesses to rely on expensive, polluting fossil fuel generators.
Almost 90% of electricity generation will come from renewable sources by 2050, according to the IEA. However, it has to be reliable. Solar and wind power naturally jump around, with way too much energy sometimes and not enough at other times, depending on the day or season. When there is no good storage for that extra power, utility companies have to basically turn down the renewables. That means we end up throwing away good, clean energy, which seriously undercuts the business case for these projects.
Emerging economies in Africa, Asia, and Latin America possess vast renewable energy potential. However, to ensure transmittable electricity supply, utility-scale battery storage is essential. BESS allows these grids to absorb high penetration of renewables, avoid blackouts, and reduce reliance on fossil fuel backup. In effect, batteries operate as the grid anchor, maintaining stability in systems that are reliant on variable renewable generation.
Senior consultant at E Co., Miodrag Grujic, says, ‘’Without adequate energy storage, power systems cannot fully benefit from renewable generation. Storage is the critical link that transforms variable renewable energy into reliable, dispatchable power, enabling grids to function securely and efficiently.’’
Why batteries are hard to finance
The global Battery Energy Storage System (BESS) market is complex, involving numerous jurisdictions and players. Developers and investors face challenges including regulatory hurdles, lack of standardization, and unfamiliar business models. Highly concentrated supply chains pose risks of disruption. While governments recognise BESS infrastructure as vital for renewables growth, demand drivers are regionally varied, making the promising market difficult to navigate.
BESS projects are capital expenditure-heavy. Even with declining battery costs, the upfront investment is substantial. In emerging markets where debt is expensive and investment risk is perceived as high, project economics often do not meet the thresholds required by banks or private investors. The result is a financing gap that prevents utilities and developers from deploying the very technology needed to stabilise grids and enable further renewable penetration.
Banks and financial institutions often see technology risk, regulatory uncertainty, and market risk as insurmountable. Devoid of instruments to share or mitigate risk, developers cannot attract private capital, and public resources alone are insufficient to cover the growing need.
Blended finance for BESS projects
Achieving energy transition goals calls for financing approaches that effectively amalgamate public and private capital, mitigate early-stage investment risks, and open pathways to emerging high-impact markets. Here is where blended finance comes in. When concessional finance such as grants, guarantees, or low-interest loans are combined with private capital, project developers can lower the effective cost of capital and make BESS projects viable. This approach de-risks investments for both cautious investors and impact-driven donors.
In 2021, South Africa’s Eskom BESS project showed blended finance at work. A USD 400 million Clean Technology Fund concessional loan put up first-loss capital, cutting risk for private investors and making possible the biggest battery rollout in Africa. Public money took on the early risks, proving that structured financing can break through expensive debt markets. The World Bank, African Development Bank (AfDB), and New Development Bank (NDB) all co-financed the project.
Meanwhile, the European Bank for Reconstruction and Development (EBRD) recently pulled together a financing package of up to USD 195.5 million for a 300 MW greenfield solar PV plant and a 75 MWh battery storage facility in the Kashkadarya region while the European Investment Bank (EIB), has provided USD 150 million in financing for the Obelisk solar photovoltaic (PV) project in Egypt’s Qena Governorate, consisting of a 1.1 GWp solar photovoltaic plant combined with a 100 MW/200 MWh battery energy storage system, developed by Scatec.
At E Co., we understand that a resilient, clean energy world requires highly specialised project design to attract capital from major donors like the Green Climate Fund (GCF) and Global Environment Facility (GEF). Leveraging our deep sector knowledge, E Co. maximises market studies and technical barrier analysis to design the financial structures that connect public and private capital. For renewables and BESS as co-working solution projects in particular, our approach focuses on both financial and technical de-risking, making complex hybrid systems attractive to donors, development banks, and private investors alike. As Miodrag Grujic explains, this strategic positioning is what ultimately secures the investment:
‘’Positioning battery storage as a strategic enabler within project and financing frameworks, E Co. helps ensure that renewable energy investments achieve bankability, resilience, and alignment with donor and investor requirements.’’
Conclusion
Battery Energy Storage Systems (BESS) are consolidating their role as a major technological solution for ensuring a stable electricity supply, optimising the use of clean energy sources, and accelerating global decarbonisation. The economic case for storage will continue strengthening as technology costs fall and market mechanisms mature. However, scaling deployment in the Global South depends on expanding blended finance solutions that address high capital costs and perceived risks. Partnerships between development finance institutions, private investors, and experienced pipeline project developers who understand the climate finance landscape such as E Co. ensure that BESS anchors renewable energy deployment and strengthens energy resilience in emerging markets.
