New Delhi: In a move aimed at further cementing India’s position as the voice of the Global South, the International Solar Alliance (ISA) plans to set up an Asian solar facility to secure investment and finance for solar projects in underdeveloped and emerging economies on the continent.
Ashish Khanna, CEO of ISA, said in an interview that the planned fund would be largely aimed at attracting long-term investment and financing from pension funds and multilateral organizations such as the Asian Development Bank.
Last month, ISA announced the Africa Solar Facility, a $200 million catalytic fund to boost investment in the solar space in Africa.
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“I think the next (thing) we could look at is an Asian facility that looks at long-term pension functions… that will initially think about what we can do in India and other places that can attract long-term funding,” Khanna said.
Its 123 members include the UAE, Bhutan, Nepal, Sri Lanka, Mongolia, Myanmar, Japan, Cambodia, Saudi Arabia, Oman, Syria, Singapore and Bangladesh.
While saying that India is the third largest solar generator in the world, Khanna expressed hope that with the likely slowdown in the US solar space, India may soon become the second largest producer of solar energy.
Long-term funds
Noting that long-term investors such as sovereign wealth funds and pension funds are not investing to their potential in the renewable energy space even in emerging markets such as India, he said, “An important trend in the world is also that long-held funds, which are sovereign wealth funds and pension funds, are still not investing in renewable energy.
If a 10-year loan can be converted to a 30-year loan, the cost will be drastically reduced, he said. “So why isn’t 30-40 year investment happening as much in renewable energy? That’s another thing we’d like to really explore. There’s 13 trillion in pension funds sitting around the world,” Khanna added.
Sovereign wealth funds (SWFs) are among the most high-profile long-term investors and serve as vehicles for investing domestic capital surpluses in international markets to generate strong financial returns. Public pension funds provide consistent returns to pension programs and other social security benefits in their home countries.
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As of 2023, sovereign wealth funds and pension funds had $32.8 trillion in assets under management, according to a PwC report. If aligned with energy transition priorities, their resources could go a long way toward bridging the energy transition and renewable energy funding gap, the report said.
He noted that for the next six months, ISA will be working on commissioning the African solar facility, after which its plans for a similar facility in Asia will take concrete shape.
“Now the work has to start in terms of setting it up in Africa and in terms of the pipeline, where, what kind of projects will be prioritized. We will probably start work in Nigeria, which has the biggest energy access gap. We are working with the Nigeria Sovereign Investment Authority,” he said.
Solar power hub
He further said that ISA will invest $15 million in the corpus of the African facility and Nigeria’s sovereign wealth fund will contribute about $150 million. In addition, the Government of India is also expected to contribute its investments under the ISA commitment of $15 million.
“We are waiting for the final approval. Once the Indian government gives the final approval, part of the $15 million will come from there,” he said.
Khanna, who took over as director-general of the India-France-backed multilateral body in March this year, said the ISA aims to develop a global hub for solar energy in India at its Gurugram headquarters, which he says can emerge as the “Silicon Valley” of solar energy.
ISA has also helped establish centers of excellence in 12 countries, including Ghana, Ethiopia, Senegal, Bhutan, Cameroon and Cuba. Four more centers will be operational by December, bringing the total to 16 and expected to rise to 50 in the coming years, he said.
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Noting that ISA has set up an ISA academy to provide online technical lessons, he said it will also launch an AI-based training platform within six months. In addition, a global solar capacity center, known as the International Center of Excellence, will be set up at its headquarters in Gwal Pahari, Gurugram, and is expected to be operational within five years.
The ISA was launched in 2015 during the UN Climate Change Conference (COP21) in Paris. With a majority of its members from Africa and Latin America, the organization serves as a strategic platform to strengthen India’s position as a champion of sustainability and a leading voice for underdeveloped and developing countries.
