International Solar Alliance - Programme “Affordable Finance at Scale”
On 22 April 2016 in New York City, Ministers from Bangladesh, Ethiopia, Nigeria, Seychelles, Sri Lanka, Uganda, India and France jointly announced under the aegis of the International Solar Alliance the launch of a Programme « Affordable Finance at Scale », to reduce the cost of finance for solar projects and mobilize more than one trillion USD of investment in photovoltaic assets in solar rich countries by 2030, and sooner if possible. This was one of the main objectives set by the 30 November 2015 Paris Declaration on the International Solar Alliance.
The cost of finance is today the main hurdle that stands in the way of deployment for mature solar technologies. Ministers agreed to begin work at the earliest, by designating in their countries Representatives responsible for the full design and implementation of this Programme, who will report to them. They agreed to take stock of the steps taken by the end of the year. They invited Ministers from all solar resource rich countries to join this Programme.
Countries joining this Programme intend to :
- design a set of best practices and measures required to set up large scale portfolios of projects eligible to common credit enhancement mechanisms ; and as a first step settle a common set of contractual documentation and practices for Power Purchase Agreements in public tenders and power procurement processes ;
- set the ground for the establishment of an international Credit Enhancement Mechanism that will help de-risk investments and reduce the cost of financing for solar projects in eligible ISA member countries ;
- conduct discussions with the Corporate sector, inter alia through the Terrawatt Initiative, on the optimal terms and conditions for investment flows in ISA member countries ; and organize on an annual basis RE-Invest fora that will materialize this multi-stakeholder dialogue based on mutually conditional objectives.
Speaking of the “Affordable finance at scale” Programme, H.E. Mr. Piyush Goyal stated that despite rapid advances in technology Solar energy is still costly to finance. He mentioned that the transition to solar energy will require huge investments from both the public and private sector over the coming decade. He said that financial incentives from government, loans and capital investment from banks, private investors, venture capital funds ; as well as new innovative market instruments are needed to undertake solar projects of scale and make solar energy affordable.
H.E. Mrs Royal, President of the COP 21 warmly welcomed the “Affordable Finance At Scale” Programme as a major breakthrough for the actual implementation of the Paris Agreement and a decisive move toward a long and fruitful cooperation of stakeholders, Governments, Businesses, Financiers to better serve the needs of the population, the economy and the climate in ISA countries.
The International Solar Alliance is an initiative jointly launched by the Prime Minister of India and the President of France on 30 November 2015 at Paris, on the sidelines of COP21. It aims at addressing obstacles to deployment at scale of solar energy through better harmonization and aggregation of demand from solar rich countries lying fully or partially between the tropic of Cancer and tropic of Capricorn.