Abstract
BACKGROUND: Achieving climate targets will require a rapid transition to clean energy. However, renewable energy (RE) firms face financial, policy, and economic barriers to mobilizing sufficient investment in low-carbon technologies, especially in low- and middle-income countries. Here, we analyze the challenges and successes of financing the energy transition in Nigeria and Brazil using three empirically grounded levers: financing environments, channels, and instruments. RESULTS: While Brazil has leveraged innovative policy instruments to mobilize large-scale investment in RE, policy uncertainty and weak financing mechanisms have hindered RE investments in Nigeria. Specifically, Brazil's energy transition has been driven by catalytic finance from the Brazilian Development Bank (BNDES). In contrast, bilateral agencies and multilateral development banks (MDBs) have been the largest financiers of renewables in Nigeria. Policy instruments and public-private partnerships need to be redesigned to attract finance and scale market opportunities for RE project developers in Nigeria. CONCLUSIONS: We conclude that robust policy frameworks, a dynamic public bank, strategic deployment of blended finance, and diversification of financing instruments would be essential to accelerate RE investment in Nigeria. Considering the crucial role of donors and MDBs in Nigeria, we propose a multi-stakeholder model to consolidate climate finance and facilitate the country's energy transition.