The International Solar Alliance (ISA) has announced that the Global Solar Facility (GSF) will be granted a capital investment of $35 million. GSY is a payment guarantee fund formed by ISA to stimulate investments into solar power projects.
India’s government is contemplating a $25 million investment as a capital contribution to the GSF, in conjunction with the $10 million already pledged by the ISA. Notably, Bloomberg Philanthropies and CIFF have also confirmed their backing for the GSF.
Speaking on the same, Union Minister for Power and New & Renewable Energy, Government of India, and President, International Solar Alliance Assembly, R K Singh said that the target for the GSF is to raise 100 million USD and that the aim going forward would be to globalize the GSF.
He said, ‘Global Solar Facility aims to leverage investments to accelerate transition to solar energy. The target for the GSF is to raise 100 million USD. Africa has immense potential in deploying solar energy capacities, yet due to risks in investments, the region has not been able to leverage its potential. The GSF aims to address this challenge and provide security to investments. India is a good example of development due to private sector investments. It has no sovereign risks and has a strong legal and security framework with a dispute mechanism and security of payments, which has enabled India to attract investments. In the years to come, we will look at globalizing the GSF. I invite all the Member Countries and organizations to partner with us in making this Facility a catalyst for the transformative change that we all are working towards.’
Expressing gratitude, Director General of the International Solar Alliance, Dr Ajay Mathur said, ‘The GSF has been working towards crowd-sourcing investments from various international donors. We are delighted to have the support of Government of India, CIFF and Bloomberg Philanthropies. This will enhance the confidence of investors to invest in decentralized solar application in Africa and enhance the certainty in receiving returns on their investments and could lead to a sea change in global investment patterns.’
Commenting about why the GSF was needed, Dr Mathur mentioned, ‘The world requires an investment of $12.5 trillion in renewable energy and $23 billion in off-grid solar by 2030. The ISA through its Global Solar Facility is stepping up as current global solar investment falls woefully short, constituting only 10% of the required amount for achieving net-zero emissions.’
He further said, ‘Additionally, there is profound disparity in investments — with developing countries, home to over 50% of the global population, receiving just 15% of 2022’s renewable energy investments. Sub-Saharan Africa’s per capita renewable energy investment has plummeted by 44% from 2015 to 2021. In stark contrast, investments in North America are 41 times higher, and in Europe, they are 57 times greater. The GSF will further our vision of addressing the urgent need for universal energy access and a clean energy transition.’
Global Solar Facility (GSF) Objectives:
- Stimulate solar investments in underprivileged sectors and regions in Africa.
- Unleash commercial funding opportunities.
- Expected to attract private capital into off-grid solar projects, rooftop solar projects, and productive use solar projects.
- Financing vehicle with payment guarantees, insurance, and investment funds to mitigate project risks.
- Provide technical assistance to address regulatory gaps, reduce currency risks, and resolve contractual and financial uncertainties in the solar energy sector.
ISA’s Goals for the GSF:
- Enable $10 billion in investments.
- Facilitate clean energy access in 35–40 million African households by 2030.
- Benefit around 200 million people in the region.
- Diversify investments in solar energy in Africa for mitigating climate change and achieving a balanced energy transition.
Current Progress:
- Conducting discussions with potential investors including member countries, development finance institutions, pension funds, and potential investment managers globally.
- Signed Memorandum of Understanding (MOUs) with Multi-Lateral Investment Guarantee Fund (MIGA), Africa 50, West African Development Bank (BOAD) to facilitate investments through the GSF in Africa.
- This comprehensive approach demonstrates the commitment of the ISA and the GSF to address energy access challenges in Africa and promote sustainable and inclusive solar energy development.
Following its activities in Africa, the GSF has ambitions to extend its reach to other regions like Asia, Latin America, and the Middle East, introducing Regional Facilities customized to their unique demands. Looking ahead, the GSF intends to channel investments into pioneering technologies to improve solar energy efficiency, provide backing for startups to expedite the implementation of solar energy, and delve into emerging sectors within the solar energy domain.
More information about ISA at https://isolaralliance.org/
