A new fund has been set up to support renewable energy projects globally, with the initial focus on increasing electricity access across sub-Saharan Africa.
The Multilateral Investment Guarantee Agency (MIGA), part of World Bank Group Guarantees, and the International Solar Alliance (ISA) recently announced the establishment of MIGA-ISA Solar Facility, a multi-donor trust fund.
It was initiated by the government of India and will offer support for expanding renewable energy projects globally.
The facility will combine ISA’s technical expertise with MIGA’s capacity to mobilise financing, “creating an innovative mechanism to accelerate the global adoption of solar energy.”
It will offer concessional financing tools, including first-loss instruments and reinsurance capacity, to improve project bankability and lower the cost of MIGA guarantees.
Additionally, MIGA and ISA will collaborate to launch new solar power and distributed energy projects in eligible developing countries.
Connecting million across sub-Saharan Africa
MIGA said that initially the facility will focus on sub-Saharan Africa, with plans for global expansion.
“Through this initiative, ISA will be an important partner of the programme supported by the World Bank Group and the African Development Bank to achieve 300 million new electricity connection in sub-Saharan Africa by 2030,” said MIGA.
The facility will be administered by MIGA, and it will help scale up its guarantee issuances, mobilising private capital for solar and distributed energy projects.
“The facility will provide cost-effective risk mitigation instruments to support the growth of solar projects in ISA member countries. ISA has committed seed-funding of $2 million, with a goal of raising $10 million for the facility. This is the first programme under the guarantee component of ISA’s Global Solar Facility (GSF), which aims to raise $200 million for projects in Africa,” said MIGA.
Hiroshi Matano, MIGA Executive Vice President, said the facility will attract private investment by providing risk mitigation and concessional financing, helping to lower costs and close the energy gap in underserved regions.
Risk mitigation to lower eventual electricity pricing
To launch the facility, the two institutions have already delivered 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 globally, and without significant efforts, 660 million people will remain without electricity by 2030, said MIGA.
ISA is a global treaty-based organisation with 118 member countries which was launched through a partnership between the governments of India and France.
ISA is rolling out the Global Solar Facility (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, comprising of guarantee, insurance and investment components.
