International Solar Alliance (ISA) conducted a founding summit in Delhi over the last two days. The event was organized with great pomp with 21 heads of state attending besides Indian Prime Minister, Narendra Modi and the French President, Emmanuel Macron. There were several new announcements on financing, project schemes and partnerships although most of these appear vague. That makes it difficult to assess real progress.
- India and France have announced lines of credit worth USD 1.4 billion and EUR 700 million respectively for member nations;
- ISA has signed new partnership agreements with the African Development Bank, Asian Development Bank, Asian Infrastructure Investment Bank, Green Climate Fund and New Development Bank, having previously executed such agreements with the World Bank, EIB and EBRD;
- India has proposed a generic action plan for increasing solar penetration, encouraging innovation, ensuring concessional funding and developing new regulatory norms;
The various initiatives announced so far fall broadly in three categories – augmenting low cost finance, scaling up solar applications such as solar water pumps, lighting systems and mini grids, and cross-border knowledge sharing. Little financial commitments have been made so far, although we continue to believe that mobilizing international capital is the lowest hanging fruit for ISA. Its highly visible profile and global partnerships should allow it to attract capital from international investors, philanthropic entities and utilities, keen to attach themselves to climate friendly causes. The proposal to procure equipment on a global scale to bring down costs seems a little far-fetched because of the vast differences in technical standards, operating and policy environment across countries.
Unfortunately, India is unlikely to benefit materially from any of the ISA initiatives. The domestic solar industry is reasonably mature with plenty of financial interest from local and overseas players. Some local contractors and equipment suppliers may be able to target new business opportunities in other countries. And it is to be hoped that India’s leadership role would focus the minds of the Indian government in addressing vexing policy and operational issues at home.
Given the nature of the alliance, it is not surprising that ISA is still a work in progress. But it appears to have more style than substance. The grand vision is still fuzzy. The target of installing 1,000 GW of solar capacity and mobilizing USD 1,000 billion in investments by 2030 seems improbable. Also, India and France are unlikely allies in this venture. Neither can stake a claim to genuine leadership in the solar sector. Both countries are keen to showcase themselves in a global leadership position and seem to be using ISA as a platform for individual gains. By denying entry to other leading nations such as Germany and China, they run the risk of holding ISA back from achieving its potential
