ISA plans new entity for fund allocation

The envisaged funds could create a total corpus of $200 million, with $100 million allocated to the payments guarantee fund, $80 million for the investment fund, and $20 million for insurance.

“One possibility being considered is the creation of a parent company that would then make separate investments in the individual funds," said one of the people seeking anonymity. The second person indicated that India might contribute $25 million initially to the entity. “The intention is for the Indian funds to be channelled into the parent company, but the precise details are yet to be finalized," he added.

While the company will be managed by ISA, it would also feature distinct facilities dedicated to Africa, Asia and Latin America, each overseen by an investment manager. Considering that the formation of the company remains a subject of ongoing deliberation, the second person said that the ISA intends to assess the interest of countries in investing in the proposed entity, which would require approval from the organization’s standing committee.

ISA is holding discussions with all member countries, including India and European nations, regarding their contributions to the payment guarantee fund and insurance fund, which were announced in October 2022.

According to the people, the proposed payments guarantee fund will provide partial guarantee for projects to lenders to attract investments for poorer countries. The insurance fund will help ISA offer insurance cover at low rate to solar power developers while the investment fund will mobilize funds for places that are deprived of private investments.

Queries mailed to ISA and union ministry of new and renewable energy remained unanswered till press time.

On 19 May, Mint reported the alliance will be submitting proposals to Green Climate Fund and Global Environment Fund for providing the initial amount for the payment guarantee mechanism. ISA is also in talks with India and European countries for contributions to the funds.

In October, ISA announced the setting up of a ‘Solar Facility’ that would help mobilize funds for solar projects across member countries, comprising developing and under-developed nations, with a major focus on Africa, due to the lack of capital and eventual lower investments in the renewable energy space.

The solar alliance was conceived as a joint effort by India and France to curb the impact of climate change by deploying solar energy solutions. The idea was conceptualized on the sidelines of the 21st Conference of Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) in Paris in 2015. With the amendment to its Framework Agreement in 2020, all member states of the UN are now eligible to join the ISA. At present, 114 countries are signatories to its Framework Agreement, of which 92 have submitted the necessary instruments of ratification to become full members. Under its Towards 1000 strategy, ISA aims to mobilize $1,000 billion for solar solutions by 2030.

It also seeks to give energy access to 1,000 million people using clean energy solutions by installing 1,000 GW of solar power capacity.

According to its website, it has nine programmes, focussing on four priority areas -- analytics & advocacy, capacity building, programmatic support, and readiness and enabling activities, which are aimed at creating a favourable environment for solar energy investments.