Emphasising on creating a robust payment security mechanism such as the Global Solar Facility (GCF), International Solar Alliance (ISA) DG Ajay Mathur on Wednesday said the payment guarantee fund helped in reducing electricity costs by 20 per cent in the Congo.
Mathur, who retires as the Director General of the global clean energy promotion body in March 2025, pointed out that there is enough capital available for funding clean energy technologies and products, to the tune of $1 trillion. However, only half of that amount is invested annually.
Almost 86 per cent of the funding is cumulatively being cornered by OECD countries, China and a few other developing nations.
Fear factor
“When we looked at it, and spoke to investment agencies, we found the greatest problem was the fear that they would not get a return on their investment. So, we looked at loan repayment rates in developing countries. In all of Africa, for example, we found less than 2 per cent of money was not returned,” Mathur told businessline in response to a query on the challenges in raising finances.
The issue will be discussed in-depth next month in New Delhi at the upcoming seventh session of the Assembly, the apex decision making body of the ISA, he added.
GCF can enhance investments in underserved regions, particularly Africa, through tools such as the Solar Payment Guarantee Fund and the Solar Insurance Fund.
Reducing power costs
The ISA, Mathur noted, has been working on solutions to tackle the issue of finances and has created a payment guarantee fund, the GCF, which will be a $100 million fund that will help in catalysing up to $1.5 billion funding for decentralised solar power projects in least developed countries.
“We believe the guarantees provided by this (GCF), the example that I gave of four solar mini grids in the Congo, brought down electricity prices by 20 per cent. It is this kind of impact that we look forward to the GCF,” he noted.
The Ministry of New & Renewable Energy Joint Secretary Ajay Yadav too emphasised on the critical role that the GCF will play in accelerating the pace of solar power installations in Africa.
“Financing is a key aspect here. The ISA will play an important role in enhancing energy access and mobilising finances. It will create more opportunities to diversify global supply chains and boost solar energy demand contributing to manufacturing capacity growth,” he added.
The GCF, which is now providing guarantees for funding in Africa, will be expanded to other countries. After Africa, the GSF aims to expand to regions such as Asia, Latin America and the Middle East, where the regional facilities will be tailored to meet specific requirements.
7th Assembly meet
Earlier, during his address at the ISA’s curtain raiser event, the Minister of New and Renewable Energy Pralhad Joshi said the ISA has evolved into a key platform for global solar cooperation, encompassing 120 member and signatory countries.
“Our efforts through the ISA focus on expanding solar infrastructure, creating green jobs, supporting livelihoods, and mitigating climate impacts.
At the seventh session of the Assembly, the fulcrum of the discussions will be the means and modes that will be adopted to accelerate solar deployment across member countries, especially in regions with limited energy access. Additionally, updates on ISA’s flagship initiatives for entrepreneurs, skill enhancement and capacity building, mobilising finance, and advocacy for solar energy as a choice will be presented.