International Solar Alliance increases viability gap funding from 10% to 35% of the solar project cost
The viability gap funding for solar projects in developing countries will be increased from 10% to 35% of the project cost, said R K Singh, Union Minister for New and Renewable Energy and President of the International Solar Alliance (ISA).
He also urged member countries to make solar the energy source of choice. Singh, was addressing ministers from 20 countries and delegates from 116 member and signatory countries gathered at ISA's 6th assembly meet in New Delhi on Tuesday (Oct.31).
"Today, we decided that we will increase the viability gap funding to be in the range of 10% to 35% of the project cost, depending on the capacity and needs of the countries and their respective projects. This will enable more investments to flow into Africa," Singh said.
The ISA has a program that makes VGF available for projects in developing countries, however, the current mechanism provides for a grant of $150,000 or 10% of the project cost (whichever is lower), per country per project. Therefore, the enhanced VGF is expected to support infrastructure projects and also attract more private players in the sector.
At the 6th assembly, Singh also inaugurated four projects set up with ISA's assistance. One of the projects being the solarization of the parliament building of the Republic of Malawi, and other projects in Fiji, Seychelles, and Kiribati.
The Power Minister also added that climate action and energy transition cannot happen until there is energy access. Further, he noted that successful energy access and energy transition practices adopted by India could be replicated in other developing countries.
"We need to de-risk investment so that private investment can come. Hence today, we also discussed how we can replicate what we have done in India in other countries, regarding the techno-regulatory framework, dispute settlement mechanisms, and payment security mechanisms, so that private investments can come in," Singh said.
"For this, ISA has set up a fund, which has components for insurance and payment security mechanism. With these mechanisms, we are certain that investments will start flowing into Africa, especially those countries which have problems of energy access to all their people."
The 6th Assembly of ISA aims to discuss critical issues of energy access, energy security, and energy transition in the developing region. The assembly will conclude on Thursday, Nov. 2.