Rays of hope for the solar alliance

The India-initiated International Solar Alliance makes a great leap forward

One of Prime Minister Narendra Modi’s pet projects is finally picking up pace, nearly a decade after he first broached the concept to former prime minister Manmohan Singh. When he was the chief minister of Gujarat, Modi had approached Singh with the idea of setting up a global solar alliance with the aim of bringing clean and affordable energy within the reach of all. 

In 2015, as the prime minister of India, Modi finally managed to sell his idea to then French President François Hollande on the sidelines of the UN Climate Change Conference in Paris. The efforts took shape in the form of International Solar Alliance (ISA), with its headquarters in Gurugram. An interim  secretariat, inaugurated by Hollande last year, has been functional since January 2016. 

While the Alliance’s aim is to have all solar-rich countries in the tropics as its members, so far 46 countries have joined the group and 19 others have ratified its framework agreement. In addition, 121 countries have in-principle agreed to join the grouping, with most participants coming from nations in Africa, Southeast Asia and Europe.

On Wednesday, the ISA will take the next leap in its journey by becoming a treaty-based international inter-governmental organisation, which will make it a more formal body than the loose conglomeration of countries that it is now.  Indeed, this is a big step forward in shifting the world’s attention from fossil fuels to renewable energy. But equally important could be the ISA’s role in putting India on the fast track in reaching its renewable energy goals. As part of its Climate Change commitments, India has set a target to generate close to 40 per cent of its energy from renewable sources by 2022. The ISA by “ensuring access to affordable, reliable, sustainable and modern energy for all” could help the country access technology and funds that weren’t easily available before.

Instead of focusing on individual efforts on reducing greenhouse gas emissions, the ISA countries have the collective responsibility to innovate and reduce the cost of finance and technology to popularise the use of solar energy in all member nations. “This will help pave the way for future solar generation, storage and good technologies for each prospective member countries’ individual needs, by effectively mobilising more than $1,000 billion in investments that will be required by 2030,” says the ISA’s mission statement. 

Already work on several projects in areas such as solar pumps, mini grids, rooftop panels, solar e-mobility and storage are under way. Three programmes — on scaling solar applications for agriculture use, affordable finance at scale, and scaling solar mini-grids — are aimed at achieving the overall goal of increasing solar energy deployment in the ISA member countries for achieving universal energy access and speeding up economic development. 

In addition to these three, two more projects are in the offing: on solar rooftops panels and e-mobility and storage.  Digital Infopedia, a platform to enable policy makers, ministers and corporate leaders from the ISA countries to interact, connect, communicate and collaborate with one another, is another major initiative of the ISA so far. 

Of all these programmes, the one on financing is currently taking centre stage. “It is on accelerated path and the prime objective of the ISA currently. The official development budget for the 52 partner countries is $102 billion. Our first partner is the World Bank and the European Investment Bank, and we are working together to mobilise funds for solar projects for our partners,” says Upendra Tripathy, director general of the ISA.

The ISA is looking to tap Indian corporations. Officials says close to $2 billion is likely to be raised from them, although no firm commitment has been made by any company yet. As an initial corpus, the Indian government has put Rs 100 crore, out of which only the interest amount would be spent. A big outgo — Rs 15 crore annually — of this interest is towards building the headquarters in Gurugram. 

The ISA has also set up a risk mitigation fund in Paris in  partnership with the Confederation of Indian Industries and a few international organisations for de-risking and reducing the financial cost of solar projects. The fund will also provide a cushion to companies supplying solar power to one of the member countries in case of delay or default in payment of dues and uncertainty due to changes in political climate. 

There are, however, no tangible targets attached to the working of the Alliance. Some countries would be responsible for export of solar panels and some for cheap technology, a legal commitment by each one of them would be made subsequently, says an official.

Yet, despite its many advantages, it has not been a smooth take off for the ISA. Private participation, for one, is a sore point. “Corporations have been asked to commit to the ISA and provide monetary support as well. It’s an impressive platform but as a business, there is no plan as such.Many countries have come forward but how and when will that lead to investment opportunities is still unclear,” says an executive with a leading renewable energy company. He also adds that this is the reason monetary support to the ISA from Indian companies is quite lukewarm.

Ministry officials, though, say the ISA could be a great platform for Indian businesses looking to get exposure to Africa and West Asia. However, few are buying it yet. But these could well be the growth pangs of a new organisation.