Introduction

The report examines why most developing countries are off track to achieve Sustainable Development Goal 7 (SDG7) on affordable, reliable and sustainable electricity by 2030. Around 685 million people still lack electricity, mainly in Sub-Saharan Africa. Rapid demand growth, fiscal constraints and recent global shocks have intensified the challenge. The report argues that repurposing power market designs is essential to mobilise private capital at scale and integrate clean energy while expanding access.

Structuring power markets

Using a global database covering 230 economies from 1989 to 2024, the report analyses three main power market structures: vertically integrated utilities (VIU), single buyer models (SBM), and wholesale and retail competition (WRC). VIUs dominated in 1989 (215 economies) but declined to 72 by 2024. SBMs are now the most prevalent (89 countries), while WRC models operate in 69 countries, mainly advanced economies. Econometric analysis shows that moving away from VIUs is associated with improved electricity access, higher installed capacity and increased private sector participation through independent power producers (IPPs). Each additional year in SBM increased electricity access by around 0.34 percentage points, particularly in rural areas. WRC models performed best on renewable uptake, with each year linked to a 0.57 percentage point rise in renewables’ share. However, SBMs were historically associated with higher carbon emissions, while WRC models showed better emissions outcomes.

Leveraging the private sector

The report highlights three structural trends reshaping electricity systems: decentralisation, digitalisation and decarbonisation. Falling costs of solar, wind and storage are enabling greater private investment across generation, mini-grids and off-grid solutions. Private capital has increasingly flowed into renewables, yet between 2010 and 2023 around 80 per cent of private power investment went to advanced economies. The report emphasises innovative financing tools, including green bonds and sustainability-linked loans, to bridge the investment gap. It also stresses the role of private firms in deploying smart grids, storage, hybrid systems and distributed generation to integrate variable renewables while maintaining reliability.

Enabling the private sector

Market reform alone is insufficient without supportive institutions and policies. The report identifies four binding constraints to private participation: cost, complexity, corruption and lack of cost recovery. To address these, it calls for transparent regulation, credible procurement, strengthened regulatory capacity and improved utility creditworthiness. Stable governance and predictable policy frameworks are shown to be critical for sustaining investment impacts. The report also highlights the role of development finance institutions in providing guarantees, risk mitigation tools, technical assistance and early-stage capital to crowd in private finance, particularly in higher-risk markets.

Conclusion and recommendations

The report concludes that achieving SDG7 requires unprecedented mobilisation of private capital supported by fit-for-purpose power market designs. It proposes a practical framework of six actions, Innovate, Integrate, Institutionalise, Incentivise, Invest and Identify—to guide policymakers, investors and development finance institutions. Recommendations are tailored by market structure, including competitive auctions for renewables, avoiding carbon-intensive long-term contracts under SBMs, and developing ancillary services and capacity markets under WRC models. Overall, the report finds that adaptive, competitive and well-governed power markets are central to delivering affordable, sustainable electricity at scale.