The International Solar Alliance (ISA) has announced a significant capital contribution of $35 million for its Global Solar Facility (GSF). This payment guarantee fund, created by ISA, aims to stimulate investments into solar power projects, particularly in underserved segments and geographies across Africa.
The GSF, approved by the International Solar Alliance Assembly last year, is expected to attract private capital to support off-grid solar projects, rooftop solar projects, and productive use solar projects. It is designed to mitigate project risks, provide technical assistance, reduce currency risks, and resolve contractual and financial uncertainties in the solar energy sector.
The Government of India is considering a $25 million investment as a capital contribution to the GSF, in addition to the $10 million commitment from the International Solar Alliance. Furthermore, Bloomberg Philanthropies and the Children’s Investment Fund Foundation (CIFF) have pledged their support to the GSF.
Union Minister for Power and New & Renewable Energy, R K Singh, highlighted the GSF’s objective of raising $100 million. He emphasized that the facility aims to leverage investments to accelerate the transition to solar energy. Africa, with its immense solar energy potential, has faced challenges in attracting investments due to risks. The GSF seeks to address these challenges and provide security to investments. India, with its robust legal and security framework, serves as an example of the development driven by private sector investments, with no sovereign risks.
Director General of the International Solar Alliance, Dr. Ajay Mathur, expressed his delight in receiving support from the Government of India, CIFF, and Bloomberg Philanthropies. He stated that this support would enhance investor confidence in decentralized solar applications in Africa, potentially leading to a significant shift in global investment patterns.
The GSF is specifically designed to provide investors with the confidence to undertake projects in Africa, with the goal of enabling $10 billion in investments. This funding will facilitate clean energy access for 35–40 million African households by 2030, benefiting approximately 200 million people in the region.
Dr. Mathur explained the necessity for the GSF, stating that the world needs $12.5 trillion in renewable energy investments and $23 billion in off-grid solar by 2030. The GSF is stepping in to bridge the gap, as current global solar investment falls far short of these requirements. There is also a stark disparity in investments, with developing countries receiving only 15% of 2022’s renewable energy investments, despite being home to over 50% of the global population.
The GSF aims to address the urgent need for universal energy access and a clean energy transition. Kate Hampton, CEO of CIFF, expressed their commitment to championing clean, affordable energy and driving the global energy transition. Antha Williams, who leads environment programs at Bloomberg Philanthropies, noted the potential for African countries to become global leaders in solar power and the need to address energy poverty and the climate crisis.
The ISA stressed the importance of diversifying investments in solar energy in Africa to mitigate climate change and achieve a balanced energy transition. Despite Africa’s vast solar potential, it only holds 1.3% of the world’s installed solar capacity. Nearly 600 million people in Africa lack access to electricity, making distributed solar power projects crucial.
Following the approval and launch of the GSF at COP27, the International Solar Alliance Secretariat has been engaging with potential investors, including member countries, development finance institutions, pension funds, and potential investment managers. The International Solar Alliance has also signed Memorandums of Understanding with organizations like the Multi-Lateral Investment Guarantee Fund (MIGA), Africa 50, and the West African Development Bank (BOAD) to facilitate investments through the GSF in Africa.
Looking ahead, the GSF plans to expand its operations to other regions such as Asia, Latin America, and the Middle East, tailoring Regional Facilities to meet specific requirements. It aims to invest in innovative technologies to enhance solar energy efficiency, support startups, and explore emerging solar energy sectors.
For more information about the International Solar Alliance, please visit their official website at https://isolaralliance.org/.