ISA partners with MIGA to set up trust fund for solar projects, starting with Sub-Saharan Africa

New Delhi: The Multilateral Investment Guarantee Agency (MIGA), a part of World Bank Group Guarantees, and the International Solar Alliance (ISA) have set up a multi-donor trust fund to support and lower the costs of solar power projects globally.

The MIGA-ISA Solar Facility will initially focus on Sub-Saharan Africa. The facility was catalysed by the Indian government and its support for expanding access to support renewable energy globally.

"The facility will combine ISA’s technical expertise with MIGA’s capacity to mobilise financing, creating an innovative mechanism to accelerate the global adoption of solar energy. It will offer concessional financing tools, including first-loss instruments and reinsurance capacity, to improve project bankability and lower the cost of MIGA guarantees," ISA said in a statement on Friday.

Both MIGA and ISA will collaborate to launch solar power and distributed-energy projects in eligible developing countries.

"Through this initiative, ISA will be an important partner of the programme supported by the World Bank Group and the African Development Bank to achieve 300 million new electricity connections in Sub-Saharan Africa by 2030," said another statement by MIGA.

The facility will be administered by MIGA, and it will help scale up its guarantee issuances, mobilising private capital for solar and distributed-energy projects. The facility will provide cost-effective risk-mitigation instruments to support the growth of solar projects in ISA member countries.

Lowering costs

ISA has committed seed-funding of $2 million, with a goal of raising $10 million for the facility. This is the first programme under the guarantee component of ISA’s Global Solar Facility (GSF), which aims to raise $200 million for projects in Africa.

“MIGA is delighted to host the MIGA-ISA Solar Facility and support Sub-Saharan Africa in accessing reliable and clean electricity,” said Hiroshi Matano, MIGA executive vice president, adding that the facility will attract private investment by providing risk mitigation and concessional financing, helping to lower costs and close the energy gap in underserved regions.

“This is an important milestone in the rollout of ISA’s GSF. We look forward to delivering clean energy through this programme to impact the lives of millions of Africans who remain off-grid to date," said ISA director general Ajay Mathur.

ISA is a global treaty-based organisation with 118 member countries launched through a partnership between the governments of India and France.

To launch the facility, the two institutions have delivered a solar project in the Democratic Republic of Congo, where MIGA guarantees and ISA financing are expected to reduce operating costs by about 20%, resulting in lower tariffs for customers.