New Delhi: As part of its bid to increase the adoption of solar power across the world, the International Solar Alliance (ISA) decided at its sixth General Assembly on Tuesday to increase the Viability Gap Funding (VGF) for renewable energy projects from 10 percent to 35 percent of the project cost. Addressing a press conference after concluding the first half of the meeting, ISA President RK Singh said, “The ISA has a programme for VGF so that viability gap funding is available for projects in developing countries. Today, we decided that we will increase the viability gap funding to be in the range of 10 percent to 35 percent of the project cost, depending on the capacity and needs of the countries and their respective projects. This will enable more investments to flow into Africa.”
Under the VGF scheme, a grant of USD 150,000 or 10 percent of the project cost (whichever is lower), per country per project, is provided by the ISA. This will now be increased to 35 percent. The funding will go mostly to developing economies in Africa and the Global South.
Stressing on the need to attract private investment into the renewable energy sector for ensuring energy access, Singh said that the ISA has set up a fund that has components of insurance and payment security mechanisms in order to de-risk investments in developing countries in Africa. “With these mechanisms, we are certain that investments will start flowing into Africa, especially those countries which have problems of energy access to all their people,” said Singh.
Speaking to PSU Watch on the sidelines of the summit, ISA Director-General (DG) Dr Ajay Mathur said that the ISA is raising funds from independent countries and the Green Climate Fund (GCF) to put in place a payment guarantee mechanism for decentralised applications in Africa. “We have talked to over a hundred investors. There is no shortage of finance. The investment that came in last year was USD 380 billion. When we talk, we find an appetite for over a trillion dollars a year. But the problem is that it is not going to all the countries, especially in the Global South. It can go to all the countries if investors are able to foresee a return. That is why we have created the Global Solar Facility which is providing the payment guarantee mechanism. Resources are being raised from independent countries, the Green Climate Fund (GCF). This is for decentralised applications in Africa because that is where the growth is needed.”
While noting that public investment alone will not ensure universal access to electricity, Singh said that the ISA General Assembly also discussed ways to replicate techno-regulatory frameworks, dispute settlement mechanisms and payment security mechanisms in India in other countries, so that private investments can come in.
The Power and New and Renewable Energy Minister underlined the importance of provision of green funds by developed countries as per their COP21 commitments. “We also expect that green finance to become available with the funds we are setting up. As the green funds start flowing as per the commitments made by developed countries at COP21, we will have renewable energy projects being rolled out at scale throughout those countries where there is problem of energy access.”
The ISA president said there are about 733 million people across the world don’t have access to electricity and it is the ISA’s mission to ensure that they get access to renewable energy.
The Sixth Assembly of the ISA was hosted at Bharat Mandapam in New Delhi and was presided over by the Union Minister for Power and New & Renewable Energy, RK Singh in his capacity as the President of the ISA Assembly. Ministers from 20 countries and delegates from across 116 Member and Signatory countries participated in the Assembly.