ISA Assembly approves payment guarantee mechanism for solar projects in Africa

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The fifth assembly of the International Solar Alliance (ISA) held today in New Delhi re-elected India as the president and France as co-president of ISA.

The Assembly was attended by ministers from 20 countries and delegates from across 110 member and signatory countries and 18 prospective countries.

“It is our mission that ISA can assist member countries in formulating and implementing solar-ready policies and regulatory development of national energy landscapes and for engaging with the public- and private-sector entities to leverage low-cost financing to achieve ISA’s solarization agenda,” said India’s power and new & renewable energy minister, RK Singh, who inaugurated the assembly in his capacity as the president. “The ISA is structured as an international resource hub with in-house technical expertise that will be readily accessible by member countries and is capable of guiding project implementation at scale.”

ISA is headquartered in India and works with governments to improve energy access and security worldwide. It promotes solar power as a sustainable way to transition to a carbon-neutral future.

ISA aims to unlock $1 trillion of solar power investments by 2030 in its member countries while reducing the cost of the technology and its financing. It promotes the use of solar energy in agriculture, health, transport, and power generation sectors.

The Co-President of the Assembly, Chrysoula Zacharopoulou, France’s Minister of State for Development, Francophonie, and International Partnerships, said: “The International Solar Alliance, co-chaired by France and India, has grown into a global provider of tangible solutions to enable universal access to affordable solar power.”

The ISA Assembly approved Solar Facility, a payment guarantee mechanism to mitigate risks associated with solar projects in Africa. The solar facility comprises two financial components: Solar Payment Guarantee Fund and Solar Insurance Fund. It is expected to stimulate high-potential solar technologies by attracting private capital into underserved markets in Africa while ensuring a payment and insurance mechanism as a first-loss guarantee.

The ISA will soon operationalize the solar facility to crowdsource investments from various donors across the globe. The proposed projects in Africa will be able to purchase payment guarantees or partial insurance premiums from these funds.

Ajay Mathur, director general of ISA, said, “With the solar facility, ISA is looking to support projects by reducing lenders’ apprehensions and enabling finance to flow for projects that otherwise may not have received funding. The payment guarantee fund will only provide a partial guarantee. With minimal default, the guarantee fund would enable investments in geographies that do not receive investments. In addition, the Solar Insurance Fund will reduce the burden of insurance premiums for solar developers in the pre-revenue phase of the project. It will offset the cost of insurance for a specified period.”

The ISA Assembly also approved the SolarX Grand Challenge, which will focus on innovation in decentralized solar energy applications that contribute to livelihoods, such as agriculture, health, and small-scale industrial applications.

 

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