ISA’s Global Solar Facility cut down cost of power by 20% in Congo, will be expanded to other geographies: DG
New Delhi: International Solar Alliance’s (ISA) Global Solar Facility brought down the cost of electricity by 20 percent in the Democratic Republic of Congo by offering payment guarantees to investors and the alliance will expand the facility to cover more geographies, said Director-General Dr Ajay Mathur on Tuesday. Stating that payment guarantee funds play a crucial role in bringing investments to developing nations where investments have not been coming in, the ISA DG said that the Global Solar Facility will eventually be expanded to cover other geographies as well.
In September this year, the ISA and the Multilateral Investment Guarantee Agency (MIGA), part of World Bank Group Guarantees, launched the MIGA-ISA Solar Facility (Facility), a multi-donor USD100-million trust fund, to mobilise USD 1.5 billion in funding for expanding decentralised solar power capacities across the least developed countries in Africa.
Global Solar Facility addressing investors’ fears about returns: ISA DG
“When we spoke to investment agencies, we found out that their greatest problem was the fear that they would not get a return on their investments. When we looked at loan repayment rates in developing countries. In Africa, we found that the repayment rate was around 98 percent, which means that only less than 2 percent of the money was not returned that had been borrowed for solar. So, the issue is how do we get money flowing because this is a perceived risk,” said Dr Mathur while addressing a press conference on Tuesday ahead of the 7th Assembly of ISA.
“Therefore, what the ISA did or is in the process of doing is creating a guarantee fund. It’s called the Global Solar Facility and it guarantees investors who invest in a small solar project in Africa. We will expand it to other geographies, but right now, it is focussed on Africa. These small solar projects are projects that affect common people, like solar mini grids, solar rooftops, solar pumps, the kind of things that provide income as well as access to energy,” Dr Mathur said.
Referring to the reduction in the cost of electricity in the Congo, where four solar mini grids have been established under ISA’s programmes, the DG said, “It is this kind of impact that we look for the Global Solar Facility to have.”
86% of capital flowing to OECD, China & other developing nations: ISA DG
Stressing that there is no dearth of capital for setting up solar projects in developing economies, Dr Mathur said that only half of the available funds are being invested by agencies and about 86 percent of these funds are going to the Organisation for Economic Co-operation and Development (OECD) countries, China and few other developing nations. There is an adequate amount of capital available for solar and other renewable sources in the world. We met about a 150 different investment agencies and we found that the annual investment in renewable energy that they were capable of was about a trillion dollars a year. What they were actually investing every year was about half of that. So, the money is there… But about 86 percent of these funds are going to OECD countries, China and few other developing countries.”
The ISA is trying to mobilise funds for setting up clean energy projects in developing countries that lack access to electricity and are not receiving investments for undertaking clean energy transition. “ISA is more than a coalition. It’s a revolutionary movement in all our countries, shaping our energy landscape and our planet’s future. Under our programmes, we have aggregated projects totalling 9.5 GW,” said Dr Mathur.
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