High costs of capital hinder the equity, speed and abatement potential of solar and wind deployment globally

High costs of capital hinder the equity, speed and abatement potential of solar and wind deployment globally | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Article High costs of capital hinder the equity, speed and abatement potential of solar and wind deployment globally Luke Hatton, Gbemi Oluleye, Malte Jansen, Iain Staffell, Adam Hawkes This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-6620411/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted You are reading this latest preprint version Abstract High costs of capital are a substantial barrier to renewables deployment in developing countries, but there is limited empirical data on how financing costs vary across countries and between technologies. Here, using bespoke estimates for over 150 countries, we assess the impact of national costs of capital on renewable levelised costs of electricity (LCOE). We show that the cost of capital is inversely related to economic development, with the inclusion of national costs of capital increasing LCOE in developing countries by an average of US $ 19/MWh and 28/MWh for solar and onshore wind, compared to a uniform scenario. Across developing regions, the share of financing costs in renewable LCOEs rises from 40–42% up to 78% under national costs of capital, leading to an annual cost increase of US $ 574bn and US $ 888bn globally if 5% of technical potential was developed. Factoring in grid carbon intensity, we show that the largest lifetime abatement potentials are located in developing countries, up to 20 times those in developed countries. Understanding the influence of high costs of capital on renewable costs will be key to the effective provision of international support in an increasingly constrained development finance environment, contributing to a more rapid and equitable energy transition. Scientific community and society/Energy and society/Energy economics Physical sciences/Energy science and technology/Renewable energy/Solar energy Physical sciences/Energy science and technology/Renewable energy/Wind energy Scientific community and society/Energy and society/Energy policy Scientific community and society/Developing world Full Text Additional Declarations There is NO Competing Interest. Supplementary Files SupplementaryData.xlsx Supplementary Data Cite Share Download PDF Status: Under Review Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-6620411","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Article","associatedPublications":[],"authors":[{"id":454550963,"identity":"46ade812-8f6e-4c32-b04f-aded6ade2463","order_by":0,"name":"Luke Hatton","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAABDklEQVRIie3RMUvEMBTA8VcKuaXXrhEUv0KgcCgEP0sfhU49HVwcbnhQ6FRxrQh+BsfbTC10qrjqZnF1OW7pIpqeFQ4h6uiQ/5QEfryEANhs/zAfvM9FEGRKDQsGLm1OuIGwgagIYKdsopE4fyRCpWI8+5VMq/Wql8eg2tXd01Ke+JOKoF8AXpKJ+DFXUXLqZOc39bxNDnMPySkawCvzxYQmNWZwr0leCwZIMCXAazMJ+4HkkD5r8i5Y0JHz9jOZbaYUkIImSjCO5A5TjBdzvdlBmyRY8kbot8SadFTvNjw0PT+YFOHjmZR4+5C9rOfLI7F/EVfd60Lulcowxt3ejD8Cyvwr3/siNpvNZtvuA8x9XWc1WfQbAAAAAElFTkSuQmCC","orcid":"","institution":"Imperial College London","correspondingAuthor":true,"prefix":"","firstName":"Luke","middleName":"","lastName":"Hatton","suffix":""},{"id":454550964,"identity":"c6dec58c-9ed4-40f0-beb5-397c5075421b","order_by":1,"name":"Gbemi Oluleye","email":"","orcid":"","institution":"Imperial College London","correspondingAuthor":false,"prefix":"","firstName":"Gbemi","middleName":"","lastName":"Oluleye","suffix":""},{"id":454550965,"identity":"4d221063-2566-4125-92ca-0ecfabe788aa","order_by":2,"name":"Malte Jansen","email":"","orcid":"","institution":"University College London; University of Sussex","correspondingAuthor":false,"prefix":"","firstName":"Malte","middleName":"","lastName":"Jansen","suffix":""},{"id":454550966,"identity":"c85c2922-931e-4065-9388-7f4ddbf21a33","order_by":3,"name":"Iain Staffell","email":"","orcid":"https://orcid.org/0000-0003-1012-7075","institution":"Imperial College London","correspondingAuthor":false,"prefix":"","firstName":"Iain","middleName":"","lastName":"Staffell","suffix":""},{"id":454550967,"identity":"c812100a-68b9-4f01-97bf-4708ce24191e","order_by":4,"name":"Adam Hawkes","email":"","orcid":"https://orcid.org/0000-0001-9720-332X","institution":"Imperial College London","correspondingAuthor":false,"prefix":"","firstName":"Adam","middleName":"","lastName":"Hawkes","suffix":""}],"badges":[],"createdAt":"2025-05-08 11:55:32","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-6620411/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-6620411/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":82807383,"identity":"d9887ad6-e679-4082-aef0-808515252e5b","added_by":"auto","created_at":"2025-05-15 12:43:29","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":2407304,"visible":true,"origin":"","legend":"","description":"","filename":"LHInequitableAccessToRenewablesDraftfinal.pdf","url":"https://assets-eu.researchsquare.com/files/rs-6620411/v1_covered_685d2f9b-5999-47f6-809c-3465134d63c9.pdf"},{"id":82481712,"identity":"c344786d-a38a-40e8-b700-2433e7ca7f42","added_by":"auto","created_at":"2025-05-12 03:44:49","extension":"xlsx","order_by":1,"title":"","display":"","copyAsset":false,"role":"supplement","size":32916,"visible":true,"origin":"","legend":"Supplementary Data","description":"","filename":"SupplementaryData.xlsx","url":"https://assets-eu.researchsquare.com/files/rs-6620411/v1/fbcc991f5db824c42da66d0c.xlsx"}],"financialInterests":"There is \u003cb\u003eNO\u003c/b\u003e Competing Interest.","formattedTitle":"High costs of capital hinder the equity, speed and abatement potential of solar and wind deployment globally","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"nature-portfolio","isNatureJournal":true,"hasQc":false,"allowDirectSubmit":false,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"","title":"Nature Portfolio","twitterHandle":"","acdcEnabled":false,"dfaEnabled":false,"editorialSystem":"ejp","reportingPortfolio":"","inReviewEnabled":true,"inReviewRevisionsEnabled":false},"keywords":"","lastPublishedDoi":"10.21203/rs.3.rs-6620411/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-6620411/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eHigh costs of capital are a substantial barrier to renewables deployment in developing countries, but there is limited empirical data on how financing costs vary across countries and between technologies. Here, using bespoke estimates for over 150 countries, we assess the impact of national costs of capital on renewable levelised costs of electricity (LCOE). We show that the cost of capital is inversely related to economic development, with the inclusion of national costs of capital increasing LCOE in developing countries by an average of US\u003cspan\u003e$\u003c/span\u003e19/MWh and 28/MWh for solar and onshore wind, compared to a uniform scenario. Across developing regions, the share of financing costs in renewable LCOEs rises from 40\u0026ndash;42% up to 78% under national costs of capital, leading to an annual cost increase of US\u003cspan\u003e$\u003c/span\u003e574bn and US\u003cspan\u003e$\u003c/span\u003e888bn globally if 5% of technical potential was developed. Factoring in grid carbon intensity, we show that the largest lifetime abatement potentials are located in developing countries, up to 20 times those in developed countries. Understanding the influence of high costs of capital on renewable costs will be key to the effective provision of international support in an increasingly constrained development finance environment, contributing to a more rapid and equitable energy transition.\u003c/p\u003e","manuscriptTitle":"High costs of capital hinder the equity, speed and abatement potential of solar and wind deployment globally","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2025-05-12 03:36:44","doi":"10.21203/rs.3.rs-6620411/v1","editorialEvents":[],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"nature-communications","isNatureJournal":true,"hasQc":false,"allowDirectSubmit":false,"externalIdentity":"NCOMMS","sideBox":"Learn more about [Nature Communications](http://www.nature.com/ncomms/)","snPcode":"","submissionUrl":"https://mts-ncomms.nature.com/","title":"Nature Communications","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"ejp","reportingPortfolio":"Nature Communications","inReviewEnabled":true,"inReviewRevisionsEnabled":false}}],"origin":"","ownerIdentity":"509c8113-013e-4e3b-ab2d-c0cffa4492bd","owner":[],"postedDate":"May 12th, 2025","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"under-review","subjectAreas":[{"id":48335510,"name":"Scientific community and society/Energy and society/Energy economics"},{"id":48335511,"name":"Physical sciences/Energy science and technology/Renewable energy/Solar energy"},{"id":48335512,"name":"Physical sciences/Energy science and technology/Renewable energy/Wind energy"},{"id":48335513,"name":"Scientific community and society/Energy and society/Energy policy"},{"id":48335514,"name":"Scientific community and society/Developing world"}],"tags":[],"updatedAt":"2025-06-25T11:46:16+00:00","versionOfRecord":[],"versionCreatedAt":"2025-05-12 03:36:44","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-6620411","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-6620411","identity":"rs-6620411","version":["v1"]},"buildId":"8U1c8b4HqxoKbykW_rLl7","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}