Although it is yet to become a legal entity under United Nations rules, the International Solar Alliance is planning to install solar pumps for irrigation in sunshine-rich nations, particularly in Africa

French President François Hollande and Prime Minister Narendra Modi at the foundation stone laying ceremony for the International Solar Alliance secretariat in January 2016. (Photo by ISA)

French President François Hollande and Prime Minister Narendra Modi at the foundation stone laying ceremony for the International Solar Alliance secretariat in January 2016. (Photo by ISA)

A year and half since its launch at Paris Climate Summit by Prime Minister Narendra Modi and French President François Hollande, the International Solar Alliance (ISA) is still waiting for ratification from another 13 countries before it becomes a legal entity. The alliance, which seeks to boost solar energy in 121 sunshine-rich countries, secured the support of 25 countries at the UN climate summit in Marrakech in November 2017. However, only two countries — India and France— have ratified it so far. Ratification from at least 15 countries is needed for ISA to exist legally.

“The first priority is to get the ratification done. Thirteen more countries need to ratify it. After that it can be registered under the article 1 and 2 of the United Nations in the next 30 days,” Upendra Tripathy, ISA’s Interim Director-General, told indiaclimatedialogue.net. “Right now, it has a de facto existence, but then it will have a legal existence.”

While this process of ratification is on, ISA, which aims to provide low-cost solar energy options in 121 countries that lie between the tropics, is embarking on some mega initiatives. One of them is focusing on the farming sector.

Big push to solar pumps

ISA is set to give a big push to solar water pumps and India is expected to play a leadership role. India has about 100,000 functional solar pumps, making it a global leader in the arena. Bangladesh and Uganda are the other leaders after India. Through ISA, India is looking at spreading the technology across other countries, especially in Africa, where farmers depend on diesel to pump water for their fields and many places in the continent are not connected to the electricity grids.

Under the alliance that looks at bringing financers and developers together to boost the clean energy deployment, host country India is already inviting and compiling a list of Indian companies that can export standardized pumps to African countries. According to the estimate, 644,000 solar pumps can be installed in Africa at the cost of USD 6 billion. However, this cost can be slashed through a mega global tender (one of the roles of ISA) where the aggregated massive demand will push down the expense.

India has also earmarked 20% of its USD 10 billion overseas development fund to deploy solar pumps in those African countries that choose to be part of the ISA and is urging developed countries like Japan and Australia, who are also part of the alliance, to do the same.

But the real progress can only happen once the global alliance becomes a legal entity. Even the construction of the headquarters building, whose foundation stone was laid by Modi and Hollande in January 2016, is likely to be stalled till then.

Funding mechanisms

The ISA is also working out mechanisms to generate a funding of USD 30 billion every year for the next 10 years. This USD 300 billion fund, according to Tripathy, would help mobilize 10 times the amount from the market. One of the mandates of ISA is to raise funds worth USD 1 trillion to help developing countries tap 1,000 GW of solar energy by 2030.

The countries won’t be required to pay this fund, as most of it will be insurance based. “World Bank just needs to get the assurance of funds subject to the demand. The demand may not come at all. These are partly guarantees and insurance type of things. For instance, if a company wants USD 500 million in Africa and provide all the risks, then we would give them guarantee against these risks at a 1% premium,” Tripathy said. “Like insurance, the need may not arise at all. But if it arises, then the World Bank can ask all these countries who have committed, to give proportionately to that amount.”

For the proposed USD 300 billion fund, mechanisms can be set to counter foreign exchange fluctuation risks as well so that low-income countries taking loans find it easier to repay. In the meantime, ISA is also trying to persuade all multilateral banks to ensure 15% of this credit portfolio goes to the installation of solar energy.

India is the only country that has put forth resources and has put INR 1 billion as a corpus to run the secretariat. ISA is aiming to boost this corpus further through corporate funding. Contributions will be sought from Fortune 1000 companies of USD 1 million each so that ISA continues to run without any financial hiccups post 2022, after which India will stop funding it further.

“So this fund won’t be touched. Every year you will get around say 4% interest that comes to USD 40 million. Out of that a portion of 15% can be used to run ISA and another 15% will be used to give solar awards to encourage research, development,” Tripathy told indiaclimatedialogue.net. “And from the remaining 70%, we will buy solar lanterns or home lighting systems, which the companies would give to low-income countries.”

Listing benefits

The ISA has also prepared a draft that lists the benefits that the investing companies will get on their investments, which is currently pegged at roughly 5 times the amount.

Also, another initiative is likely to be launched in Gandhinagar in Gujarat on 22 May on scaling up of mini grids. The aim is to scale up mini grids, especially in island countries or those countries that have islands, so that the use of diesel is replaced by clean energy. These mini grids will also be smart grids and can be monitored from afar. So far, Indian companies have shown an interest to setup 78MW of mini grids in Africa.

While ISA is working to channelize investments in solar sector and to bring more loans and equity, it will again only be able to make an impact once it becomes a legal body. Hope is on that once it gets the legal tag, it will attract the funding it requires.

As for India that is spearheading the entire initiative and will continue to play the role of leadership till 2022, ISA is also a tool to secure its position among world leaders internationally. While efforts are on to make the running and functioning of the ISA self sustainable from the next five years on, it will depend a lot on India how it plays the role of a leader in bringing the world together for fast deployment of solar power.

 

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