Sign In
Learn bits
Economy
Mahesh

01/11/23 12:10 PM IST

International Solar Alliance’s Global Solar Facility set to receive a capital contribution of $35 million dollars

In News
  • The International Solar Alliance (ISA)  announced that the Global Solar Facility (GSF), a payment guarantee fund formed by ISA to stimulate investments into solar power projects, is set to receive a capital contribution of $35 million dollars.
About GSF
  • The Global Solar Facility (GSF) is designed to catalyze solar investments in underserved segments and geographies across Africa, unlocking commercial capital in the process. Last year, the ISA Assembly approved the Global Solar Facility, which is expected to attract private capital to flow into off-grid solar projects, rooftop solar projects, and productive use solar projects.
  • This financing vehicle, bolstered by payment guarantees, insurance, and investment funds, aims to mitigate project risks, provide technical assistance to address regulatory gaps, reduce currency risks, and resolve contractual and financial uncertainties in the solar energy sector.
  • The Government of India is considering a $25 million investment as capital contribution in the GSF in addition to $10 million coming from the ISA. Bloomberg Philanthropies and CIFF have also committed their support to the GSF.
  • The target for the GSF is to raise 100 million USD. Africa has immense potential in deploying solar energy capacities, yet due to risks in investments, the region has not been able to leverage its potential.
  • The GSF aims to address this challenge and provide security to investments. India is a good example of development due to private sector investments.
  • It has no sovereign risks and has a strong legal and security framework with a dispute mechanism and security of payments, which has enabled India to attract investments.
  • The GSF is expressly designed to provide investors with the confidence to take up projects in Africa and to enabling $10 billion in investments, which will facilitate clean energy access in 35–40 million African households by 2030 and benefit around 200 million people in the region.
  • The world requires an investment of $12.5 trillion in renewable energy and $23 billion in off-grid solar by 2030.
  • The ISA through its Global Solar Facility is stepping up as current global solar investment falls woefully short, constituting only 10% of the required amount for achieving net-zero emissions.
  • Additionally, there is profound disparity in investments — with developing countries, home to over 50% of the global population, receiving just 15% of 2022's renewable energy investments.
  • Sub-Saharan Africa's per capita renewable energy investment has plummeted by 44% from 2015 to 2021.
  • In stark contrast, investments in North America are 41 times higher, and in Europe, they are 57 times greater. The GSF will further our vision of addressing the urgent need for universal energy access and a clean energy transition
Significance
  • The ISA highlighted the need for diversifying investments in solar energy in Africa for mitigating climate change and a balanced energy transition.
  • Despite its vast solar potential, Africa possesses only 1.3% of the world’s installed solar capacity (11.4 GW out of 849 GW in 2021).
  • With nearly 600 million people in Africa lacking access to electricity, there exists a compelling case for distributed solar power projects.
  • Following the approval and launch of GSF at COP27, the ISA Secretariat has been conducting discussions with potential investors including member countries, development finance institutions, pension funds, and potential investment managers from across the world.
  • The ISA has signed Memorandum of Understanding (MOUs) with Multi-Lateral Investment Guarantee Fund (MIGA), Africa 50, West African Development Bank (BOAD) for facilitating investments through the GSF in Africa.
  • 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.
  • In the future, GSF plans to invest in innovative technologies to enhance solar energy efficiency, support startups for faster solar energy implementation, and explore emerging solar energy sectors
ISA assembly
  • The Assembly is the apex decision-making body of ISA, in which each Member Country is represented.
  • This body makes decisions concerning the implementation of the ISA’s Framework Agreement and coordinated actions to be taken to achieve its objective.
  • The Assembly meets annually at the ministerial level at the ISA’s seat.
  • It assesses the aggregate effect of the programmes and other activities in terms of deployment of solar energy, performance, reliability, cost, and scale of finance.
  • The Sixth Assembly of the ISA is deliberating on the key initiatives of ISA on three critical issues energy access, energy security, and energy transition.
Source- Indian Express

More Related Current Affairs View All

24 Sep

Leveraging transit-oriented development to build productive cities

'Indian cities are on the brink of a transportation revolution, with a projected expenditure of ?3 trillion (between 2022–2027) set to be spent on approved metro rail project

Read More

24 Sep

Section 107 of BNSS

'The Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, introduced Section 107, which deals with properties which are “proceeds of crime”.' Until recently, this term w

Read More

24 Sep

Supreme Court strengthened child pornography law

'Tightening the law on child pornography, the Supreme Court recently said that even viewing, possessing, and not reporting such content is punishable under the Protection of Childr

Read More

India’s First Ai-Driven Magazine Generator

Generate Your Custom Current Affairs Magazine using our AI in just 3 steps