The International Solar Alliance (ISA) was born in 2015 out of a shared ambition to reduce the cost of finance and technology, and to mobilise investments to enhance the deployment of solar energy across the globe. Led by India, the ISA has grown significantly with the number of members and ratifications increasing each year. In an interview with Renewable Watch, Upendra Tripathy, interim director general, ISA, speaks about its ongoing programmes and country-level commitments, the management of its financial corpus, its future plans and focus points. Excerpts…
Where does ISA currently stand and what is the level of commitment from member countries?
Out of 121 prospective member countries of the ISA, 65 countries have signed and 35 have ratified the ISA framework agreement. We are hoping that in the near future, more countries will join the alliance. With regard to the level of commitment, the ratification in itself is a big commitment, which requires member countries to abide by the treaty. The members put in place a national focal point by appointing a country representative. They provide consent to join the “solar revolution” and also commit to run the ISA’s various programmes.
So far, we have four programmes in which member countries can participate. These are Scaling Solar Applications for Agricultural Use; Affordable Finance at Scale; Scaling Solar Minigrids; and Scaling Solar Rooftop. The fourth programme, Scaling Solar Rooftop, was announced recently, on March 11, 2018, at the ISA founding ceremony. As per Article 6(2) of the treaty, the secretariat will make proposals before the assembly to establish and enhance a corpus fund, which will generate revenues for the ISA’s budget, with an initial donation of $16 million. The Indian government will contribute $27 million to the corpus and to support the secretariat’s functioning over a five-year period. In addition, public sector undertakings such as the Solar Energy Corporation of India and the Indian Renewable Energy Development Agency have made a contribution of $1 million each for the ISA corpus fund. Recently, NTPC and Power Grid Corporation of India Limited have contributed $1 million each. In the private sector, China Power and Light has contributed $1 million and the Japan-based Softbank Group has contributed $2 million.
Alternatively, ISA is exploring the possible adoption of the Korean model of the Global Green Growth Institute (GGGI) to get contributions for running the alliance. The GGGI follows a model that provides rigorous technical assistance to governments through embedded country teams and helps mobilise finance for climate-resilient projects for achieving the commitments made under the Paris Climate Agreement and Sustainable Development Goals. However, the final decision on this will be made by the assembly/ steering committee.
What are ISA’s focus areas for the future?
The ISA has three key focus areas. The first two are funds mobilisation and helping member countries make their solar projects bankable. For each country, ISA has a task force that is headed by a national focal point, which is appointed by the sovereign government. The task force will have five experts, each heading a different programme-scaling solar applications (street lights, pumps, etc.), scaling solar finance, solar mini grids, rooftop solar, and solar e-mobility and storage. The third focus area is establishing Solar Technology Application and Resource (STAR) centres. ISA has proposed to set up about 20 STAR centres this year to manage capacity building, innovation, standards and certifications, quality control, etc. in the solar energy segment.
ISA, unlike its peer organisations, does not charge any mandatory membership fee and hence has limited financial resources at hand to discharge its mandate in an effective and efficient manner. Therefore, in order to make it sustainable and financially viable and to meet its stated objectives once the government stops providing financial support, there is a need to augment ISA’s corpus to a level of over $1,000 million. The corpus may remain in perpetuity and the interest earned will become the source of operating cost of the secretariat and assembly.
Since its launch, the Indian government has remained fully committed to the objectives of the ISA. In addition to its contribution to the corpus fund, a recurring expenditure grant of $2.5 million per annum for the period 2016 to 2021 has also been committed for meeting the ISA’s operational expenditure as well as the cost of outreach events, training programmes and capacity building. The programmes being run by the ISA will help it in achieving its stated mandate and in realising universal energy access targets, thereby speeding economic development. The financial resources required for the implementation of a specific programme, other than administrative costs falling under the general budget, are assessed and mobilised by the participating countries with the support and assistance of the secretariat. On ISA’s request, the Indian government has earmarked a $2 billion line of credit to African countries for the implementation of solar and associated projects under the Indian Development and Economic Assistance Scheme. About $1.4 billion worth of solar projects have been approved in principle and were announced on March 11, 2018. The French Government, a founding member of ISA, through the AgenceFrançaise de Dévelopement, had committed Euro 300 Million for solar projects across ISA member countries in 2015. On March 11, 2018, it announced another Euro 700 million to be disbursed by 2022, bringing its total commitment to Euro 1 billion since its launch. The ISA will similarly persuade other countries to contribute to the cause of solar deployment globally.
How is ISA planning to enhance the transmission infrastructure of member countries?
Owing to grid constraints, most member countries have expressed difficulties in allowing more than 10 per cent of solar energy, or renewable energy for that matter, in their energy mix. So the electrical grid is going to play a big role in the ISA’s agenda. As of now, not even one of the four programmes is entirely focused on grid connectivity or smart grids. But at some point in the future, such a programme is likely to be initiated. As the programmes are decided by the member countries and their focal points, the secretariat can propose the development of transmission infrastructure to these member countries on the lines of India’s green energy corridors.
How does ISA ensure effective management of financial resources?
The alliance only persuades banks to invest in projects or countries to set up projects. Moreover, all the sovereign member countries have their own procedures and ISA does not interfere in the management of their funds. The financial institutions and the countries are solely responsible for managing the funds.
The role of the ISA is only to bring countries and financial institutions together. For example, an ISA delegation is being proposed with the help of the United Nations Industrial Development Organization, the World Bank and the African Renewable Energy Initiative. This delegation would visit the African countries and meet their ministers with one message, “do not take loans, instead give the projects on a power purchase agreement (PPA) basis and under the renewable energy service company (RESCO) model”, provided the projects are bankable.
The ISA’s priority is to promote the adoption of the RESCO model in the member countries. The countries should not have to take loans for developing solar projects; instead, corporates should manage loans for the projects that they have set up. In India too, the PPA is signed between the off-taker and the developer, and all developers put in their own money. However, off-grid projects set up by poor people in rural areas cannot be based on the PPA model. Here, the governments’ role may be essential to provide subsidies.
Is ISA looking to provide funds to various governments for promoting their solar programmes?
No. the ISA does not provide funds to member countries to promote their solar programmes.