A special purpose vehicle (SPV) is aimed to be created to specifically finance solar projects by the International Solar Alliance (ISA) as the organization plans to appeal to multilateral development banks (MDBs) such as Asian Infrastructure Investment Bank (AIIB), said the organization’s interim director general, Upendra Tripathy.
Tripathi said that the SPV would have the objective of financing $150 billion and hence would become a World Solar Bank. ISA will soon send a concept note for the solar bank to all of the eight MDBs with which there are joint declarations of the India based organization.
It was back in October 2015 that the idea for creating a solar alliance was first mooted by Indian Prime Minister Narendra Modi during the India-Africa Summit in Delhi. For enhancing cooperation in the solar energy area, joint declarations have been struck between the ISA and the World Bank, African Development Bank, Asian Development Bank, AIIB, New Development Bank, European Investment Bank, European Bank for Reconstruction and Development and the Green Climate Fund (GCF).
The mission of the ISA is to reduce the cost of financing for solar projects as well as the cost of technology, garner over $1,000 billion of investments needed by 2030 for solar energy and help develop future technologies.
“MDBs have a global duty. All of them can come together and show the way,” said Tripathy.
In order to build a global solar energy ecosystem, the reach of the AIIB is planned to be leveraged by ISA. The Beijing-headquartered bank would first invite five common member countries of the AIIB and the ISA for according to the initial plan.
China with 31.02% stake is the largest country of the AIIB, while India is the second largest with 8.72% stake.
As a part of a strategy for the creation of a sustainable financing architecture for solar projects globally, a $300-billion risk mitigation fund is also being worked upon by ISA. That fund would help insure solar projects form risks like payment defaults by electricity procurers, fluctuations in foreign exchange and political change.
“We are in touch with them (AIIB). We are trying to develop a two-year action plan. The first thing that we have requested them is to give us the names of the solar projects that they have financed. We are also requesting them to give us a list of projects in the pipeline,” said Tripathi.
AIIB began operations in January 2016 and its aim is to enhance “social and economic outcomes in Asia and beyond”. It has a capital of $100 billion and has 86 countries as members.
“The idea is that we can tie up with those member countries, where AIIB has sanctioned projects for training of people who will look after these projects…Why projects fail is because there is nobody to take care of them. We are establishing backward linkages,” said Tripathi.
(Adapted from LliveMint.com)