- The International Solar Alliance (ISA) is an inter-governmental agency that mobilises action on climate change by promoting solar energy solutions.
- ISA’s head, Ajay Mathur, speaks to Mongabay-India about the agency’s role in the global solar movement and the scope of G20 in this journey.
- ISA’s role in the global transition to renewable, particularly solar energy, is being taken forward by its efforts to push mini grids to increase energy access and facilitate finance towards developing countries.
Solar energy has been a significant contributor to India’s energy transition. Over the past decade, the cumulative global capacity of solar photovoltaic (PV) has reached approximately 942 GW. But how does the growth of solar align with the global targets of reducing emissions and alleviating energy poverty? To delve into this further, Mongabay-India talked to Dr. Ajay Mathur, Director General of the International Solar Alliance (ISA) and discussed a range of issues, from the role of G20 to push energy transition to ISA’s journey so far and the progress on One Sun One World One Grid (OSOWOG).
The ISA, an inter-governmental organisation, started as a collaborative effort between India and France at COP21. ISA is a collaborative platform comprising nations that work together to promote the widespread adoption of solar energy technologies. Its primary goals are to expand access to energy, enhance energy security, and facilitate the transition to clean energy in member countries. By 2030, the alliance strives to mobilise $1 trillion in investments for solar energy solutions. Currently, ISA has 115 member and signatory countries in the alliance.
In the interview with Mongabay-India, Mathur talks about the One Sun One World One Grid (OSOWOG), an initiative of ISA, which aims to interlink regional grids through a common grid, enabling the transfer of renewable energy, particularly solar power. The OSOWOG, initiated at the inaugural Assembly of the ISA in October 2018, seeks to establish interconnected energy networks across national boundaries. Its underlying vision is based on the notion that the sun is always shining somewhere on the planet.
ISA aims to leverage the G20 platform to advocate its vision for driving the energy transition and ensuring the inclusion of underprivileged nations in this transformative journey.
In conversation with Mongabay, Mathur who was earlier working at the Indian government’s Bureau of Energy Efficiency and at The Energy and Resources Institute (TERI), gives detailed insights about ISA.
Mongabay: India has assumed the G20 presidency, which has strengthened ISA’s vision towards renewable energy. What do you think is the role of G20 and the ISA in mutually promoting clean energy?
Ajay Mathur: The essence of the G20 lies in forging a global consensus. The agreements reached within this forum are often qualitative, outlining how each member nation will proceed, considering their unique legislative histories and past experiences. As a result, the paths chosen by each country may vary.
First, we believe, achieving universal energy access can be realised through the implementation of solar mini-grids. Through extensive research, presentations, and forthcoming reports, we aim to demonstrate that this approach is more cost-effective than extending power lines over distances exceeding 10 kilometres. By targeting areas with population densities of 200 to 400 individuals per square kilometre, we are paving the way for electricity access for approximately 600 million people who would otherwise lack access.
Secondly, we aspire to facilitate knowledge sharing and collaboration by recognising the growing emphasis on domestic actions related to green hydrogen among G20 nations. Our vision entails establishing a user-friendly portal that consolidates and makes readily available information from various sources. By connecting existing portals and implementing an intelligent retrieval system, we seek to enable easy access to valuable insights, ensuring that countries can benefit from each other’s efforts.
Third, a mechanism to increase investments in the solar sector. There is money being invested in solar. In 2021, it was worth $200 billion. In 2022, it was over $250 billion; this year, it will be somewhere near $360 to $400 billion. But it is amazingly skewed. A vast amount of it is invested in China and OECD countries. All of Africa gets less than five percent.
We are creating a payment guarantee mechanism that gives investors the confidence that they can invest in the African market. For this, we need local entrepreneurs who are developing solutions. Therefore, we are in the process of identifying local startups that are in the solar sector. We have received applications from 180 startups. We will select 20 startups among them. We will identify and get them recognition so that the financing and technology sectors can start investing in them.
Once we complete this in Africa with these 20 startups, we will try it in Asia, the Gulf region, Latin America, etc.
Mongabay: India’s neighbouring countries such as Nepal, Bangladesh, and others, see India as among the leading players in the solar movement. How can India contribute to renewable development in these countries?
Ajay Mathur: It is a little more than that. India is a developing country where the electricity demand is still increasing, unlike developed countries where it has saturated.
Consequently, as far as developing countries are concerned, they face two tasks: to change what already exists and work on future-ready systems. At the same time, electricity demand is growing in these countries. Today, solar electricity is the cheapest, but only when the sun shines. So, we still need fossil fuel power not only in India and other developing countries but also in the developed world. This is a double challenge that developing countries face.
As far as developing countries are concerned, India is one of the very few countries that has shown how solar can grow.
We have made these changes in the last ten years. Consequently, we become a country of interest to the member countries of the ISA, whether it is in terms of the instruments used or the institutions. By institutions, I mean who is allocating the capacity, signing the power purchase agreement, etc. India has also built a system to ensure global investment will come. So, for example, everyone, whether it is International Energy Agency (IEA), International Monetary Fund (IMF), or World Bank, has a great degree of fascination with how India has created a rupee-based market instead of a dollar-based market.
So, there are many learnings that you can pull from India. With the World Bank, we have created a programme called Lighthouse India, giving several details on how India has achieved this feat.
Mongabay: How do you envision the ISA’s role in addressing the disparity between the rich and the poor countries when it comes to accessing solar energy?
Ajay Mathur: If we consider the Indian experience, attracting global funding was initially challenging. Therefore, the first step was establishing favourable conditions demonstrating investment opportunities and profitable returns. Initially, we provided viability gap funding through a grant obtained from the World Bank. Subsequently, we transitioned to providing full loans through a credit line facilitated by the World Bank through the State Bank of India.
Now, the private sector is beginning to participate. However, their involvement often requires co-investment from the public sector, such as the World Bank and other financial institutions. Currently, we are in the process of converting these lines of credit into guarantees. This shift to guarantees is anticipated to attract more private investments.
As we observe other countries, many have already taken steps toward achieving tangible benefits through grants and viability gap funding. The focus now shifts towards ensuring they have guarantees in place. To address this, ISA has established a solar facility that offers a payment guarantee mechanism. This mechanism ensures that if a counterparty fails to repay, the guarantee fund covers a portion of the default amount for a six-month period.
Our analysis revealed that the current default rate is less than 10%. This instrument has been created specifically for small-scale solar projects, as larger-scale solar initiatives already have similar mechanisms in place. It is particularly relevant for solar mini-grids, pumps, and rooftop installations.
Once this instrument gains traction, it enhances investor confidence. This is the direction we aim to move towards. We hope that such guarantees become increasingly popular, not only within the ISA but also among other organisations.
Mongabay: What are your thoughts on the progress made and the prospects of the One Sun One World One Grid (OSOWOG) project, which aims to establish interconnected energy networks across national boundaries?
Ajay Mathur: First, the global discussion process has commenced, prompted by India and, specifically, the ISA. We commissioned a study to EDF Electricity France to initiate this process. As a result, various countries such as the UK, UAE, Saudi Arabia, Egypt, and India have initiated their studies. This leads to the second part, where we witness collaborations taking shape. India and UAE have signed a Memorandum of Understanding, as have Egypt and Saudi Arabia. The importance of inter-regional connections is being recognised within these economies. They realise that such grids provide a platform for selling energy and reduce the need for extensive battery capacity.
Furthermore, third-party evaluations have emerged, particularly from potential line installers and other interested parties. These evaluations focus on the upcoming regulatory framework that will govern these inter-regional connections. It is anticipated that this regulatory framework will be established within the next few months, shaping the future operations of these initiatives.
Regarding the preparation of the regulatory framework, it is being conducted in three phases. The first phase has already been completed, and the second phase is currently underway, nearing completion in the coming days. After the second phase, the third phase will commence and is expected to be finalised by the end of the year. This phased approach ensures a comprehensive and well-thought-out regulatory framework for the upcoming initiatives.
Mongabay: What are the challenges for the OSOWOG project in terms of capital and regional cooperation needed to successfully implement this project? How do you envision addressing these issues and finding a way forward?
Ajay Mathur: The most significant challenge we face is ensuring that investors in this initiative can recover their investments and earn a reasonable, regulated profit without causing electricity costs to become prohibitively high. Addressing this challenge involves considering various aspects. For instance, will there be a joint regulatory mechanism between the two countries involved? Will a Special Purpose Vehicle (SPV) be created for this purpose? How will this be incorporated into the contract? These are crucial issues that need to be addressed.
The second aspect is how to provide assurance that investors will indeed receive payment. If the signatories on both sides have a reliable reputation for timely payments, it mitigates concerns. However, if there is uncertainty in terms of payment reliability, credit enhancement measures become necessary. The guarantee mechanism serves as a credit enhancement measure. We must convince investors that their investment is worthwhile, which is one of the key challenges.
By addressing these challenges, we can create an environment that ensures investor confidence and fosters the successful implementation of the initiative.
Mongabay: Do you perceive any geopolitical risks associated with the regional grid as envisioned under the OSOWOG project?
Ajay Mathur: There are precedents of regional groupings in the electricity sector that have occurred in the past. For example, East Asia has already established extensive connections, despite existing rivalries. Similarly, South Asia is gradually developing connections. India has a limited capacity exchange with Bangladesh, limited but increasing capacity with Nepal, and full collaboration with Bhutan. Active efforts are being made to establish connections with Sri Lanka and potentially even with the Maldives.
Europe stands as a prime example of a well-connected region in terms of electricity grids. West Africa and East Africa also have regional power pools, showcasing how countries with historical conflicts can collaborate in the realm of regional power.
The concept of “One World, One Grid” involves establishing connections between different regions, with the underlying assumption that the countries involved will have friendly relations, although challenges exist.
At worst, parts of the cable will go underground or submarine. While implementing underground or submarine cables may increase costs, it mitigates geopolitical risks. It is important to note that geopolitical dynamics are subject to change, just as the integration of East European trade with the European Union was once unforeseen.
In terms of cable technology, there are existing examples of long-standing submarine cables between the UK and Northern Europe. Projects like the proposed submarine cable from Australia to Singapore and the partially submarine Egypt-Saudi Arabia cable demonstrate the feasibility of this technology. The ongoing work involves assessing the economics of submarine cables compared to land cables. The goal is to determine if the potential increase in costs would render the projects financially unviable or if they still present viable solutions. This assessment is an ongoing process that considers the technological and economic aspects of these connections.
Banner Image: Dr. Ajay Mathur, Director General of the International Solar Alliance (ISA). Photo by International Solar Alliance (ISA)