The International Solar Alliance (ISA) on Wednesday announced that the Global Solar Facility (GSF), a payment guarantee fund formed by ISA to stimulate investments into solar power projects, is set to receive a capital contribution of $35 million.

India is hosting the sixth assembly of the ISA, which is scheduled to conclude on Thursday. The meet is seeing participation of ministers from 20 countries as well as delegates from 116 member and signatory countries.

The GSF is designed to catalyse solar investments in underserved segments and geographies across Africa, unlocking commercial capital in the process, ISA said.

Last year, the ISA assembly approved the GSF, which is expected to attract private capital to flow into off-grid solar projects, rooftop solar projects, and productive use solar projects, it added.

This financing vehicle, bolstered by payment guarantees, insurance and investment funds, aims 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.

Security to investments

“The government of India is considering a $25 million investment as capital contribution in the GSF in addition to $10 million coming from the ISA. Bloomberg Philanthropies and Children’s Investment Fund Foundation (CIFF) have also committed their support to the GSF,” ISA said.

Power and New and Renewable Minister R K Singh emphasised that the GSF aims to leverage investments to accelerate transition to solar energy. The target for the GSF is to raise $100 million. 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 a security of payments, which has enabled India to attract investments. In the years to come, we will look at globalising the GSF,” Singh, who is also President of the ISA Assembly, added.

ISA Director General Ajay Mathur said that GSF has been working towards crowd sourcing investments from various international donors.

Africa focus

“We are delighted to have the support of the government of India, CIFF and Bloomberg Philanthropies. This will enhance the confidence of investors to invest in decentralized solar applications in Africa and enhance the certainty in receiving returns on their investments and could lead to a sea change in global investment patterns,” he added.

The ISA highlighted that the GSF is expressly designed to provide investors with the confidence to take up projects in Africa and to enable $10 billion in investments, which will further clean energy access in 35–40 million African households by 2030 and benefit around 200 million people in the region.

Despite its vast solar potential, Africa possesses only 1.3 per cent of the world’s installed solar capacity, 11.4 gigawatts (GW) out of 849 GW in 2021.

With nearly 600 million people in Africa lacking access to electricity, there exists a compelling case for distributed solar power projects. Following the approval and launch of GSF at COP27, the ISA Secretariat has been conducting discussions with potential investors including member countries, development finance institutions, pension funds, and potential investment managers from across the world.

The ISA has signed memorandum of understanding (MoUs) with Multi-Lateral Investment Guarantee Fund (MIGA), Africa 50, West African Development Bank (BOAD) for facilitating investments through the GSF in Africa.

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