Initiated in Delhi at the first International Solar Alliance (ISA) summit in March 2018, the initiative will support the ISA’s goal to reduce costs and mobilize $1,000 billion in public and private investments to finance 1,000 GW of global solar capacity by 2030.
“The World Bank, in partnership with AFD, remains committed to the International Solar Alliance’s goals and to global efforts to fight climate change. Through this new, integrated approach, we hope to further scale up solar energy use by reducing the cost of financing for solar projects and de-risking them, especially in low-income countries,” said Riccardo Puliti, Senior Director of Energy and Extractives at the World Bank.
As the costs for solar power have fallen steadily, solar power is increasingly viewed as a key component in the fight against climate change. However, solar deployment has been slow in some emerging markets, particularly Africa, due to layers of risks perceived by the private sector in financing solar projects. The SRMI aims to change that.
“This partnership with ISA and the World Bank is another step towards achieving the objective of the Paris Agreement of redirecting financial flows in favor of low carbon and resilient development pathways. AFD is glad to join forces with these partners to deliver on the commitments made at COP21, to bring solutions to de-risk potential solar investments and mobilize the private sector to invest in sustainable development” said Rémy RIOUX, CEO of AFD.
The SRMI’s integrated approach will include:
- Support for the development of an enabling policy environment in targeted countries
- A new digital procurement (e-tendering) platform to facilitate and streamline solar auctions
- Targeting relatively small (under 20 MW) solar projects, offering a more comprehensive risk mitigation package of support to a wider range of investors and financiers to promote scale up at later stages. The financial risk mitigation package offered by SRMI will be supported by technical assistance and concerted engagement on planning, resource mapping and power sector reforms to ensure the creditworthiness of utilities in these countries
- Mitigating the residual project’s risks through adequate risk mitigation financial instruments for both on and off-grid projects
The governments of India and France launched the ISA, an international organization as part of the Paris Climate Agreement in 2015 to scale up solar energy resources, reduce the cost of financing for solar projects around the world and ultimately help reach the Sustainable Development Goal on energy (SDG7) of providing access to affordable, reliable, sustainable and modern energy to all. To date, 71 countries have signed the constituting treaty of the ISA, and 48 have ratified it.
The SRMI is supported by the World Bank’s Energy Sector Management Assistance Program (ESMAP) and AFD.
About the World Bank
With 189 member countries, staff from more than 170 countries and offices in over 130 locations, the World Bank Group is a unique global partnership: five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.