We are planning to organise Re-Invest in Peru, Indonesia and Kenya to attract more member countries: Upendra Tripathy, Interim DG, ISA
We are also contemplating a price exploratory tender for 500,000 pumps which will aggregate demand for solar pumps from multiple countries
New Delhi: India launched the International Solar Alliance (ISA) in November 2015 as a global organisation to help ramp up adoption of solar energy. More than two years since then, the global body has taken firm steps in helping member countries in the areas of solar financing, technology access and creation of bankable projects, says Interim Director General Upendra Tripathy. Mobilising $1,000 billion of funding and its equitable distribution is the focus area going ahead, the former secretary of the Ministry of New and Renewable Energy tells ETEnergyWorld in an exclusive interview. Edited excerpts:
ISA has an aim to deploy over 1,000 Gw of solar energy and target mobilising of $1,000 billion into solar energy by 2030. What has been the success so far?
Mobilising $1 trillion is only part of the story. The equitable distribution of this capital is of utmost importance. We are working on that. ISA has already launched four programmes designed to ensure maximum scale effect and participation of the largest possible number of members. We are contemplating a price exploratory tender for 500,000 pumps which will aggregate demand for solar pumps from multiple countries. India has expressed the need for 300,000 pumps, Bangladesh wants 50,000 and Uganda wants 30,000 of them. To get a commitment from sovereign countries to buy may be a time-consuming and difficult process. We have, therefore, gone for a price exploratory tender where the bidders will have to furnish country-specific rates at the point of delivery. The idea of aggregation of risk, resources and demand at national and international level is a powerful and innovative idea. India has already tried this idea in the field of LED bulbs, which is a best practice for the world to be emulated. The innovation for ISA is to try it on several countries together for different goods and services in the solar space.
What are the steps you have taken to increase use of solar energy in ISA members and in meeting climate targets set under the Paris Agreement?
We have taken several crucial steps. It is a work in progress. ISA has three key focus areas. First of them is mobilisation of finance. To work on this, ISA has World Bank, European Investment Bank, European Bank for Reconstruction and Development, ADB, AfDB, NDB, AIIB, and GCF as its financial partners. ISA has been mandated to mobilise over $1,000 billion of investment into solar sector by 2030. It has also been working in the field of credit-risk mitigation and enhancing marketability of renewable energy green bonds. The second objective is helping member countries formulate bankable solar projects. For each country, ISA has proposed a task force that will be headed by the National Focal Point (NFP), appointed by the member countries. The task force will have four experts, each heading a different programme, namely, scaling solar applications for agricultural use, affordable finance at scale, scaling solar mini-grids, and scaling solar rooftop. The banks and lenders are eager to invest. But, the issue is how to craft good and bankable projects where the risk is mitigated in such a way that the financiers want to invest in it. ISA is also in the process of establishing a Common Risk Mitigation Mechanism (CRMM) and a mitigation fund with contributions from the World Bank, Overseas Development Assistance and from the Green Climate Fund.
Also, India has earmarked 20 per cent of its $10-billion line of credit (LOC) for African countries to promote solar projects in ISA’s African member countries. During the Founding Conference, India announced financing 27 projects in 15 countries by extending nearly $1.4 billion worth of LOC. France has earmarked one billion euros for solar projects. ISA has floated Expression of Interest to bring out a Global Price Exploratory Tender. The third focus area is establishing Solar Technology Application and Resource (iSTAR) centers. ISA has proposed to set up several iSTAR centres this year to manage capacity building, innovation, etc.
ISA is open to all the 121 prospective member countries falling between the Tropics of Cancer and Capricorn but so far only 68 countries have joined the association and 40 countries have ratified. Do you think there are challenges for the rest of the countries for becoming members?
The framework agreement opened up for signature in November 2016. So, 68 is not a small number. Ratification is a long process. The sovereign countries must obtain the executive and legislative approval for signing and ratification. We went to Munich, Abu Dhabi, Bonn and invited several ministers from the countries that are not members yet. We are trying to organise Re-Invest in Peru, Indonesia and Kenya to attract more countries. The programmes are also making an impact. Hence, we feel that all these activities will be attracting more members in the near future. The Solar Summit in New Delhi last March and India’s 10-point programme and the Delhi Declaration announced there have generated a lot of interest. The Assembly in October combined with RE-Invest II will attract a lot more countries to become full-fledged members.
ISA does not charge any membership fee. Is that a concern from the point of view of maintaining expenses and mobilising resources in the long run?
ISA does not charge membership fee. The Association of the Commonwealth Countries gets around 52 million pounds every year as membership fee. International Renewable Energy Agency gets $22 million annually. ISA’s treaty makers kept zero membership fee to encourage more members to join initially and that is why prospective members like Japan are very curious to know what will be the basis for financial sustainability after the fifth year. This question has to be taken up by the Assembly. The treaty provides for voluntary contributions and mobilisation of expenses by member countries who participate in the programmes. Some revenue can also be generated from ISA activities. As of now, for a country like India whose bilateral soft loans goes $1.2 billion a year, it is not difficult to run ISA, which is the first treaty-based organisation headquartered in India.
We have got a corpus of $25 million now including $16 million from the Indian government, $6 million from SECI, IREDA, NTPC; REC, PFC, PGCIL and $3 million from private corporates such as Softbank of Japan and CLP of China. Our aim is to build a corpus of $1 billion which can be cumulatively raised from private sector, public sector, international agencies, governments of different countries, etc. In the absence of membership fee one cannot run an organisation in the longer run and therefore it is essential to have a corpus of this size for a global association like ISA. We are in talks with the International Taskforce on resource mobilisation chaired by CII to help us in mobilising the corpus and they have got $3 million from private companies. Our first Assembly meet is scheduled from 2-4 October 2018. It may discuss the corpus and give its advice and guidance. Under the treaty, the director general has to find ways for resource mobilisation. We do not have shortage of funds now as the Indian government, World Bank, EU and ADB have started putting money. France has given staff to ISA on secondment. Soon, we will mobilise resources from several quarters. There is a lot of demand from non-member countries to open up their borders. We are very happy to know that countries like Italy, Germany, Spain, Morocco, and Nepal want to join as full-fledged members.
The global solar energy sector is evolving rapidly. What according to you are the key and defining trends being witnessed currently in both the solar and the related area of energy storage?
The solar sector has entered a virtuous cycle. Some of the interesting trends to watch would include the proliferation of global solar tenders, risk mitigation mechanisms and their effect on the tariff and the diversification of the global market. It would be very interesting to understand whether large countries like China, the US, India, Germany and Japan still dominate the sector. It would also be interesting to see the developments on all fronts in countries such as Brazil, Egypt, Mexico, the Netherlands and Spain, which may be poised to cross the 1 GW annual threshold for the first time in 2018. The US is diversifying, too. New data shows that 18 US states will install 1 GW or more of photovoltaic capacity between 2018 and 2022. These states will together account for 80 per cent of US installations during the same time period. This is an interesting development. Recent bids are pushing average Power Purchase Agreement (PPA) tariffs past the cost-competitive range with coal and gas, that means PV continues to compete with (and beat) coal and natural gas. Nearly all global low-bid projects have long lead times and are still unbuilt and unproven. It remains to be seen how market and country-level risks will erode the tendered pipelines. It will be a bumpy road for module supply. So, solar module excess capacity would be another trend to watch. Also, balance-of-system costs will be an important cost-reduction driver. Growing distributed generation markets and a heightened focus on safety will result in the continued proliferation of technologies like module-level power electronics outpacing centralised and string inverters. So, despite some speed bumps, the global solar market is set to outlive the targets.
Battery storage is rightfully one of the hottest topics in the energy industry right now. The potential benefits and profitability has prompted plenty of excitement among industry leaders and for good reason. The widespread deployment of energy storage, especially batteries, will increase substantially in the next few years. In fact, analysts project an annual market of 2,600 Mw by 2022 — that’s nearly 12 times the size of the 2016 market. The three underlying trends driving this growth include favourable federal and state regulations on energy storage, falling costs for batteries due to advances in technologies and the ability of energy storage projects’ owners to tap into multiple revenue streams. Many countries now plan to switch over to storage missions. The next generation of tenders may ask for 24×7 renewable energy supplies. Many countries are bringing in innovative energy policies wherein distributed and decentralised systems play a greater role, thus reducing dependence on old grid systems. The PV systems are also undergoing a transformation via bi-focal systems.