Inter-governmental agency International Solar Alliance is working on a mechanism to provide financial guarantees to project developers to promote investments in the sector.
The agency which came into effect last week, will create a risk mitigation fund of $1 billion with the help of the Indian, French governments, banks and the Green Climate Fund, Upendra Tripathy, interim director general of the ISA told BloombergQuint in a telephonic interview. The fund will be used to insure solar power projects against possible risks and is likely to be in place by December next year, he added.
Championed by India and France, the ISA came into effect last week, aims to mobilise $1 trillion of low-cost financing for solar energy by 2030 through global tenders and cheap financing. It has been ratified by 19 countries and has 46 signatories to its framework agreement.
Here are edited excerpts from the interview.
How will ISA mobilise funds?
The alliance will develop an insurance scheme called Common Risk Mitigating Mechanism for investors so that more investment can take place in the solar sector. In the next one year, we should create an insurance fund or risk mitigation fund of $1 billion with the help of India, France, banks and Green Climate Fund. The mechanism will be rolled out by December next year.
It is expected that the mechanism will help diversify and pool risks to unlock huge investment in the sector which may need more than $1 trillion to create solar energy capacity of 1,000 GW globally by 2030.
We interact with multilateral agencies like Asian Development Bank, African Development Bank, Inter American Development Bank etc ask them to give credit roadmap future in solar. 10% of loan can be earmarked for solar. This will promote sustainable development goals of UN.
What are your plans to encourage adoption of solar rooftops by member countries?
We are planning a solar rooftop scheme in which the heads of member countries will be asked to have solar powered offices and homes. ISA can introduce a scheme where the office and house of the President of the country, Parliament chiefs and judiciary chiefs will be asked to have solar powered offices and residential areas. This will have a high visibility value for the solar rooftop programme. This scheme is likely to be announced during All India Solar Summit in February 2018.
Talk us through your plan to open a global tender for solar pumps?
The alliance is planning to open a global tender of 500,000 solar pumps for farmers after three months. India is plans to have 100,000 pumps, Bangladesh 50,000 pumps and Uganda 30,000 pumps. We have been asking all member countries how many solar pumps they are going to need and then we will aggregate it and put a global tender of around 500,000 pumps. We want to replace all diesel pumps with solar ones.
Research and development in the solar sector has progressed relatively slowly. How will the ISA address this challenge?
We plan to set up 10 centres of excellence in countries with developed infrastructure such as India, China, France, U.S., Brazil, South Africa and Australia. The purpose for setting up these centres would be research and development in the solar sector. These would be full fledged centres for testing and capacity building, testing, certification and standard setting.
A mini grid programme is also in the works and member countries will be asked as to how many mini grids they need. We have decided to circulate expression of interest to companies within the next one month. We will take out a tender through a professional agency like EESL and it will be a global tender.