The world’s 1 billion people who live without electricity are not benefiting from climate change money promised by governments to help them develop.

In theory, there has never been a better time for developing countries to install renewable energy such as solar or wind to combat climate change. The UN’s Green Climate Fund (GCF), along with the World Bank and regional development banks, have all said they intend to significantly increase their green energy financing, offering developing countries cheap loans and grants. Many donor countries like Britain and Japan have also pledged to help poorer nations switch to clean energy.

But as diplomats and organisations from 190 countries will hear this week at the UN climate summit in Katowice, Poland, the reality is that the public money available is not nearly enough to meet their needs. Existing funds will not provide clean electricity for people who live beyond grids.

The GCF, set up in 2010 to handle the money countries pledged to help the world adapt to climate change, is the great new hope for developing countries. But it has had a slow and torrid start, with rich countries backsliding on their pledges to fund it and poor countries bitterly complaining that international banks control the funds for their own profit. Last year Donald Trump cancelled $2bn (£1.57bn) of the $3bn promised to the GCF by former president Barack Obama. More recently, Australia has chosen not to contribute.

“We now have 93 projects, worth $4.6bn. Thirty-nine projects, worth $1.6bn in GCF resources, are under implementation, and we expect to have disbursed around $483m by the end of the year,” said Simon Wilson, head of communication in the external affairs division of the Korea-based operation.

Wilson says more than 40% of the GCF’s projects are micro- or small-scale investments of under $250,000. “Demand for climate finance already exceeds supply, and disbursement of funds for energy projects is expected to pick up quickly over the next few years,” he said.

But Neha Rai, senior researcher at London-based International Institute for Environment and Development (IIED), said little international climate money is funding decentralised, or off-grid, energy.

“Of the $14bn approved so far for climate finance worldwide, about 40%, or $5.6bn, has been marked for energy projects. But only 3% ($475m) has been allocated for decentralised energy. That is the equivalent of just $51m a year,” she says.

Instead of accessing public funds from governments, developing countries must turn to commercial banks. But these, motivated by profit, are loth to provide money to what they consider risky projects.

“For a [clean energy] proposal to be accepted by a bank, it needs hard data and a wealth of detail,” says Nathan Rive, a climate change specialist with the Asian Development Bank. “However, in many developing countries data on energy and emissions is sparse, unavailable or unreliable, making detailed project-specific climate assessments difficult.”

The resulting bias toward more developed countries is stark. Of the roughly $333bn estimated by financial research group Bloomberg New Energy Finance to have been invested worldwide in renewable energy in 2017, nearly $280bn went to China, the US, Canada, Europe, Japan and Australia.

A handful of middle-income countries like Mexico and South Korea, India, Brazil and Egypt absorbed a further $28bn. The remaining countries attracted only about $25bn between them, despite having most of the people currently without electricity.

Ironically, climate change may be making it even harder for developing countries to raise money for renewable energy projects. Particularly vulnerable ones, such as Bangladesh and small island states, must pay more to borrow because climate change is regarded by banks as an extra financial risk, according to a new UN Environment Programme–backed study.

Researchers who examined the financial data of 48 countries, including Bangladesh, Guatemala, Kenya and Vietnam, found that vulnerable countries have had to pay an extra $62bn for capital over the past 10 years.

“Climate vulnerability has already raised the average cost of borrowing to developing countries through higher interest rates. We expect the additional interest payments attributable to climate vulnerability to increase to between $146bn and $188bn over the next decade,” says Charles Donovan, director of the Centre for Climate Finance at Imperial College Business School.

A Turkana herd boy carries his gun as he follows his goats near the Lake Turkana Wind Power project in Marsabit County, northern Kenya. Photograph: Thomas Mukoya/Reuters

Consultants working with ministers and banks to raise clean energy finance say the world’s 47 least developed countries and the 39 small island developing states are barely on the financial map for clean energy.

“There are major challenges in reaching least developed countries and small island developing states, due to a lack of sophisticated capital. As a result of this … renewable energy projects tend to be located in middle-income countries,” said Virginie Fayolle, a senior economist who leads climate finance at Acclimatise, a London-based consultancy which advises developing countries on how to access climate finance.

Developing countries require a higher level of investment in infrastructure, such as small-scale, off-grid and decentralised projects, to reach more remote populations, said Ming Yang, a senior climate change specialist at the Global Environment Facility (GEF), which has provided a significant amount of money for small-scale electrification.

Between October 1991 and August 2017, the GEF granted $1.19bn to 254 renewable energy projects. Of these, 43% are micro-grids, mini-grids or decentralised, said Yang.

“The problem is not that there is not enough money. It is lack of political will. There is definitely institutional bias against poor countries when it comes to sustainable energy,” said Lidy Nacpil, coordinator of the Asian Peoples’ Movement on Debt and Development.

“We see renewable energy as a public good and say that governments and international financial institutions should use public funds to take the lead in developing democratic renewable energy systems,” she said.