The International Solar Alliance, a coalition of tropical nations, becomes a legal entity this week, which will add impetus to its aim to boost solar power capacity in 121 countries
Large projects are expected to bring down costs of solar power in developing countries (Photo by Pixabay)
Solar power in tropical countries is expected to get a big push when the International Solar Alliance (ISA) — launched two years ago in Paris by Prime Minister Narendra Modi and the then French President François Hollande — becomes a legal entity on December 6. The international coalition aims to bring 121 tropical countries under one umbrella to boost large-scale deployment of solar power in nations rich in sunshine.
Within two years of inception, the alliance has got signatures from 45 countries and 15 of them have ratified it — the minimum number that was needed for the ISA to receive legal status through a framework agreement. This will also be the first India-based intergovernmental body and might help give a boost to the geopolitical position of India that is still vying for a seat in UN Security Council.
Most of the countries in in the tropical belt are either underdeveloped or at a developing stage, and hence, sustainable growth and energy access are at the heart of issues in these areas that lag behind in modern technologies and finance. ISA aims to fill this gap by taking up joint efforts to reduce the cost of both finance and technology and also by mobilising more than USD 1,000 billion in investments by 2030 for installation of solar power projects.
Legal status
With the alliance now getting its legal status, it is expected that its main programmes and the goals of aggregating demand for solar technologies (mega tenders are expected to bring down the cost of solar power), finance, innovation, research and development and capacity building will get expedited.
“India had put in money but other funding has not come simply because we are not legal and so we don’t have a dollar account. There are foundations that have offered money to ISA. The European Union wants to give USD 375,000, but we can’t take it, as we don’t exist legally,” Upendra Tripathy, Interim Director General, ISA, told indiaclimatedialogue.net. “So after 6th December, we can open an account.”
“Once we come into force, the host country agreement has to be signed because it gives a legal right to contract,” he added. “Today we can’t recruit anybody nor can we sign a contract with anybody. It is National Institute of Solar Energy (NISE) that is managing us.”
Already several initiatives to facilitate solar energy are in the immediate pipeline. During December 7-10, 25 member countries will meet, and each will unveil a solar roadmap. Three India-based think tanks — Centre for Study of Science, Technology and Policy (CSTEP), the Energy Resources Institute (TERI) and the Council on Energy, Environment and Water (CEEW) — have helped formulate these plans, which are on the lines of India’s national solar mission. Officials said Japan and France are already ready with blueprints.
“The idea is that under the ISA, the best practises of various countries should be taken to other member countries, and the National Solar Mission is among India’s best practices,” Tripathy told indiaclimatedialogue.net.
The delegates will also visit a site in Rajasthan to see India’s solar water pump technology, in which India leads globally. However, the ISA summit that was to take place from December 9 has been postponed till the third week of January when French President Emmanuel Macron is expected to be in India as Chief Guest for Republic Day celebrations on January 26.
The International Solar Alliance has five main programmes. The first one is scaling solar applications for agricultural use. Under this, the ISA is pushing for installation of over 644,000 solar water pumps in African countries where the farmers would benefit from this off-grid technology. India is going to play a leadership role and has earmarked USD 2 billion of soft loans from its overseas development fund to install pumps in those African countries that choose to ratify the treaty-based ISA framework agreement. See: International Solar Alliance plans major irrigative initiative
However, on the ground, the project has not taken off in a big way. Negotiations are going on between India and the African countries for agreement over a clause that says 75% of the technology should be procured from the Indian companies.
Affordable finance
The second programme, called Affordable Finance At Scale, is among the most crucial ones and lot of emphasis is being given on how to generate funds for 1TW solar energy by 2030 across member countries. According to a recent report by CEEW released at Bonn climate summit last month, nearly 75% of the project cost in India is the cost of capital. See: Solar alliance brings sunshine to Bonn summit
ISA is looking to attracting funds and bringing down the cost of solar projects through a financial risk reduction mechanism. Officials say this can be achieved through an international guarantee mechanism, a risk mitigation fund designed specifically for solar projects, and by creating a congenial environment where multilateral banks are able to raise funds in local currency in order to lower the cost of hedging against foreign exchange fluctuation risks.
“Right now the hedging cost comes out to be 6-7%, but if that is taken care of, then the capital cost will drop down to 35-40% from 75%, which would be a huge boost,” said Tripathy.
ISA is also aiming to raising 10 risk mitigation funds of USD 1 billion each, which can further attract investments of USD 10 billion each. The Indian Renewable Energy Development Agency (IREDA) has given a grant of USD 4 million to put small risk mitigation instruments in place.
“We are also telling Green Climate Fund (GCF) if they contribute just USD 1 billion to a designated multilateral bank, then just this USD 1 billion can be used to leverage money from outside,” added Tripathy. “If public money comes first, then it will attract private money. This will happen because of this protection more and more people will invest money, more and more banks will give loans, and the cost will come down by 20% at least.”
ISA’s third programme is going to push for scaling up for solar mini-grids in small island countries. For this, a list of companies is already being compiled. Other programmes on scaling of solar rooftops and solar E-mobility and storage (batteries) are going to be launched soon.
The International Solar Alliance has garnered much interest from countries that lie beyond the tropics. Countries such as Nepal and Germany have shown an interest to join the ISA. China, which is the world’s biggest solar manufacturer and can benefit immensely from the platform, has also shown an interest to be a part of ISA at the Bonn summit. According to government sources, the US has started out as a strong supporter but given President Donald Trump’s decision to pull out of the Paris Agreement, the dialogue has slowed down. However, officials say this won’t be an impediment for the sunshine coalition.
Meanwhile, on December 6, officials at the Delhi headquarters of ISA have decided to gift clothes and solar lanterns to over 400 orphans, mentally challenged and abandoned people who live in a village in Gurugram and don’t have access to electricity.
The first task that the ISA will take up after coming into full force will be to take up the construction of the building that will house the headquarters of ISA, the foundation stone of which was laid by Modi and Hollande in 2016. The construction will begin once the design is finalised and approved by member countries. See: International Solar Alliance gets a new home
