The World Bank and Agence Française de Développement (AFD), France’s public development bank, have announced that they are jointly working on a Solar Risk Mitigation Initiative (SRMI) to improve solar energy deployment in some of the world’s poorest countries. The initiative will cover policy, technical, and financial issues related to the deployment of solar energy in these countries.
The initiative’s integrated approach will include:
- Support for the development of an enabling policy structure in the selected countries
- A new digital procurement (e-tendering) platform to streamline solar auctions
- Targeting relatively small (under 20 MW) solar projects
- Using adequate financial instruments to mitigate the residual project’s risks for both on and off-grid projects
The idea of SRMI was first proposed at the first International Solar Alliance (ISA) summit in March 2018. It 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 ISA is an Indian initiative that was jointly launched by Narendra Modi and the French president on November 30, 2015, in Paris, on the sidelines of COP-21, the UN Climate Conference.
“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 in a press release.
Despite the reduction in the cost of solar power, many emerging markets have been sluggish in adopting it, especially in African countries. SRMI will try to reduce the risks of financing solar projects by the private sector in these countries.
Rémy RIOUX, CEO of AFD said,“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.”
Developing countries increased their renewable energy investments by more than $74.3 billion to $177.1 billion in 2017, according to a report by UN Environment in collaboration with the Frankfurt School-UNEP Collaborating Centre and Bloomberg New Energy Finance. In comparison, developing countries invested $102.8 billion in renewables during 2016. The report ranked India 4th in terms of new investments in renewable energy. In 2017, Mercom researchers found that the Indian solar sector logged over $10 billion (~₹650 billion) in financing activity as reported in Mercom’s 2017 Q4 and Annual India Solar Market Update.