New Delhi, Sept 10, 2024: The Multilateral Investment Guarantee Agency, part of World Bank Group Guarantees, and the International Solar Alliance have announced the establishment of a multi-donor trust fund, which will combine ISA’s technical expertise and MIGA’s capacity to mobilize financing, creating an innovative mechanism to accelerate the global adoption of solar energy, including cutting-edge solar energy technologies. It will offer concessional financing tools, including first-loss instruments and reinsurance capacity, to improve project bankability and lower the cost of MIGA guarantees. Initially, the facility will focus on supporting Sub-Saharan Africa, with plans to expand globally.
Administered by MIGA, the MIGA-ISA Solar Facility will help scale up its guarantee issuance, mobilizing private capital for solar and distributed energy projects. It will provide cost-effective risk mitigation instruments to support the growth of solar projects in ISA member countries. The ISA has committed a seed funding of USD 2 million, with a target to raise USD 10 million for the facility. This is the first program under the guarantee component of ISA’s Global Solar Facility (GSF), which will have a target size of USD 200 million for Africa.
Additionally, both MIGA and ISA will support each other in launching new solar power and distributed energy projects in eligible developing countries.
“ISA is excited to collaborate with MIGA for providing cost-effective guarantee solutions for decentralized solar projects in Africa,” said Dr Ajay Mathur, Director General, ISA. “This is an important milestone in the roll out under ISA’s GSF. We look forward to providing cost effective clean energy through this program to impact the lives of millions of Africans that remain off-grid to date,” he said.
“MIGA is excited to host the MIGA-ISA Solar Facility and support Sub-Saharan Africa in accessing reliable and clean electricity. The facility will attract private investment by providing risk mitigation and concessional financing, and lower costs and close the energy gap in underserved regions,” said Hiroshi Matano, Executive Vice President, MIGA.
ISA and MIGA have previously collaborated on a solar project in the Democratic Republic of Congo, where MIGA guarantees and ISA financing are expected to reduce operating costs by approximately 20%, resulting in lower tariffs for customers. About 675 million people lack access to electricity, and without significant efforts, 660 million people will remain without electricity by 2030. The World Bank Group and African Development Bank Group are partnering on an ambitious effort to provide at least 300 million people in Africa with electricity access by 2030.
A global treaty-based organization, ISA has 119 member countries, including India. An action-oriented, member-driven, it is a collaborative platform for increased deployment of solar energy technologies as a means for bringing energy access, ensuring energy security, and accompanying its member countries to lead their own energy transition autonomously. ISA is rolling out a GSF to provide cost effective financing solutions which are otherwise not available in the market to help accelerate deployment of distributed solar projects to all the regions, starting with Africa. The Africa Facility is targeted at $200 million facility comprising of guarantee, insurance and investment components.
