Photo: Ricardo Stuckert / PR, Wikimedia Commons
In 1973, an oil embargo disrupted international energy markets, exposing how decisions made by a relatively small group of producers could affect economies thousands of miles away. The following year, industrialized countries established the International Energy Agency to coordinate responses to future oil supply disruptions. The crisis showed how energy resources can shape international relations and economic security.
More than fifty years later, the renewable electricity transition is reshaping these relationships. Geothermal, hydropower, wind, and solar resources are distributed across countries with different financial resources, institutions, and negotiating power. Developing these resources often requires international financing, technology, and partnerships in infrastructure.
As governments prepare for COP31 in Antalya, Türkiye, in November 2026, countries’ ability to negotiate financing, shape market rules, and retain control over national development priorities will shape the next phase of the renewable electricity transition.
From Energy Security to Climate Diplomacy
International climate cooperation expanded the energy discussion beyond supply security to include emissions, development, and shared environmental responsibilities. The United Nations Framework Convention on Climate Change was adopted in 1992, followed by the Kyoto Protocol in 1997. The 2015 Paris Agreement introduced a framework in which countries set their own national climate commitments.
These agreements established common objectives without removing differences in economic interests. Governments must still balance emissions commitments with electricity demand, industrial development, and infrastructure costs.
The growing influence of emerging economies adds another dimension as countries increasingly engage different partners on climate finance, technology, trade, and infrastructure, creating opportunities to negotiate arrangements that reflect domestic priorities. Yet access to multiple partners does not necessarily improve bargaining power, especially when governments face urgent investment needs or limited access to affordable capital.
For renewable electricity, the consequences extend to the terms of power-purchase agreements, transmission investment, market access, and the financial obligations assumed by public utilities.
Kenya: Renewable Electricity and the Cost of Investment
Photo: George Garang, Wikimedia Commons
Kenya demonstrates why renewable electricity performance must be examined alongside affordability and financial sustainability. According to the IEA’s Kenya 2024 Energy Policy Review, renewable sources accounted for nearly 90% of electricity generation in 2023, including geothermal at 47%, hydropower at 21%, wind at 16%, and solar at 4%. Electricity access increased from 37% in 2013 to 79% in 2023. Despite this progress, electricity affordability remains a challenge, with the IEA identifying inflation, currency depreciation, and changes in subsidies among the factors affecting electricity prices.
The IEA’s March 2026 assessment, Integrating Variable Renewable Energy in Kenya, also identifies open access to electricity networks, greater system flexibility and storage, and stronger arrangements for ancillary services as priorities. These reforms have direct economic implications as network-access rules determine how electricity producers enter the market, while storage and ancillary-service arrangements influence investment incentives and system operating costs.
Financing terms are equally important because renewable electricity projects require substantial upfront investment, often supported by long-term contracts. When financing is denominated in foreign currencies but electricity revenues are collected locally, exchange-rate movements can increase financial pressure on utilities and, depending on contractual arrangements, consumers.
For Kenya, the policy challenge is therefore to attract investment while managing the costs and risks associated with expanding the electricity system. Development finance should be assessed by its contribution to reliable supply, affordable tariffs, and utilities’ financial sustainability.
Emerging Economies and Diplomatic Influence
Brazil’s hosting of COP30 in Belém in 2025 demonstrated the growing influence of emerging economies in climate diplomacy. The conference concluded with 56 consensus decisions, including the creation of a Global Implementation Accelerator, a call to triple adaptation finance by 2035, and a new work programme on climate finance.
Brazil therefore offers a concrete example of how emerging economies can use diplomatic leadership to shape discussions on finance, implementation, and development priorities. However, diplomatic visibility does not automatically translate into domestic benefits, making the more important question whether international negotiations improve access to affordable finance, strengthen domestic capabilities, and support infrastructure that responds to national development priorities.
This is relevant as countries balance relationships with multilateral development banks, regional institutions, and bilateral financing partners. Different partners may offer different combinations of concessional finance, commercial investment, technology, and technical assistance. The important consideration is whether these arrangements strengthen domestic capabilities and improve investment conditions, rather than simply increasing the number of international partnerships.
The European Union: Regulation as a Source of Influence
The European Union illustrates how international influence can operate through common market rules. Under its revised Renewable Energy Directive, the EU has a binding target for renewable energy to account for at least 42.5% of total energy consumption by 2030. Its 15% electricity interconnection target is intended to strengthen cross-border transmission and support electricity-market integration. These policies influence infrastructure planning, investment decisions, and the conditions under which electricity moves between national markets.
Regional electricity trade can help countries manage supply and demand variations, particularly as wind and solar generation expand, although the benefits depend on transmission capacity, compatible regulations, and agreements on how infrastructure costs are shared.
For African countries developing regional power markets, the EU experience offers relevant lessons in regulatory coordination. The institutional arrangements cannot simply be transferred from one region to another; they must reflect existing electricity markets, financial conditions, and national development priorities.
COP31: Negotiating Finance and Implementation
COP31 will take place in Antalya, Türkiye, from November 9 to 20, 2026, with Türkiye hosting the conference and Australia leading the negotiations. The October preparatory meetings in Fiji, Tuvalu, and Australia highlighted Pacific concerns, particularly climate finance, resilience, and stronger emissions reductions. These priorities reflect the different pressures countries bring to international negotiations.
The European Union is also preparing its position, with Reuters reporting on October 12 that an internal EU draft emphasizes implementing existing climate commitments, accelerating electrification, and extending international discussions on emissions reductions. The draft contains no new financial commitments and remains subject to negotiation. This could create a point of disagreement with developing countries seeking additional financing.
For electricity systems, the debate has practical consequences because international commitments to expand renewable capacity require corresponding investment in transmission, distribution, storage, and system management. Yet these investments may face different financing conditions from generation projects, particularly where revenues are uncertain or public utilities face financial constraints.
The distinction between financial pledges and actual disbursements also deserves attention because announced commitments do not necessarily indicate when funding will become available, whether projects have reached financial close, or when infrastructure will begin operating.
At COP28, governments agreed to contribute to global efforts to triple renewable energy capacity by 2030, and as that deadline approaches, the effectiveness of international cooperation will increasingly depend on whether countries can translate commitments into functioning electricity infrastructure.
Practical Realities
Ahead of COP31, governments should prioritize investment plans that identify the infrastructure, financing, and regulatory measures required to meet their renewable electricity commitments.
For Kenya, this means advancing network-access rules, improving grid flexibility, and establishing clear arrangements for storage and ancillary services. These reforms should be accompanied by assessments of their implications for electricity tariffs, market participation, and utility finances.
Development finance institutions should place greater emphasis on the full financial costs of electricity projects, including borrowing terms, currency exposure, contractual guarantees, and long-term public obligations. Evaluating investments on affordability, reliability, and electricity access would better capture development impact than generation capacity alone.
International climate-finance reporting should also distinguish pledges from approvals, disbursements, and completed projects. This would help governments and development partners identify financing gaps and assess progress before the 2030 deadline.
In short, progress should be measured by whether renewable electricity investment delivers reliable, affordable power while strengthening the institutions responsible for governing it.
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