High costs of capital shape the mitigation effects of renewable energy deployment globally.

High costs of capital are a major barrier to renewables deployment in low- and middle-income countries (LMICs), impeding decarbonisation efforts despite strong renewable resources. Using grid carbon intensity trajectories, we show that renewable deployment in LMICs has mitigation potentials over 20 times larger per project than high-income countries, even before accounting for planned fossil projects. High costs of capital increase renewable levelised costs of electricity (LCOEs) in LMICs substantially, adding an average of US$26/MWh (solar) and US$24/MWh (onshore wind) relative to high-income financing terms. Financing costs account for up to 78% of the LCOE in LMICs, compared with 37-39% in high-income countries, restricting a large portion of global renewable potential. Under a scenario consistent with the target of tripling global renewable capacity by 2030, this corresponds to additional annual costs of US$245bn (solar) and US$329bn (wind). Our results highlight the importance of reducing financing costs in LMICs for a more equitable and efficient energy transition.