ISA Launches Asia Solar Facility to Boost Investment in Solar Power

The International Solar Alliance (ISA) is set to establish an Asia Solar Facility aimed at attracting long-term investments for solar projects in developing and emerging economies across the continent. In an interview, Ashish Khanna, the Director General of ISA, highlighted that this initiative focuses on securing funding from pension funds and multilateral organizations, such as the Asian Development Bank.

This announcement follows the ISA’s recent unveiling of the Africa Solar Facility, a $200 million fund designed to enhance solar power investment in Africa. Khanna stated, “I think the next (thing) we might look at is an Asia facility that looks at long tenure pension functions… which will initially think of what can we do in India and other places that can attract long-term financing.”

India currently ranks as the third-largest solar power generator globally. Khanna expressed optimism that a potential slowdown in solar energy developments in the United States could position India to become the second-largest producer of solar power. He noted that long-term investors, including sovereign wealth funds and pension funds, have yet to fully engage in the renewable energy sector, even in burgeoning markets like India.

According to Khanna, “A trend that is also important in the world is that long tenure funds… are still not investing in renewable energy.” He emphasized that extending loan durations from ten years to thirty could significantly lower costs. “$13 trillion of pension funds are lying in the world,” he added, underscoring the untapped potential for investment in renewable energy.

Sovereign wealth funds (SWFs) are among the most prominent long-term investors, serving as conduits for domestic capital surpluses to generate robust financial returns. Public pension funds aim to offer consistent returns to support pension schemes and social security benefits within their respective countries. A recent report by PwC revealed that, as of 2023, SWFs and pension funds collectively managed assets worth $32.8 trillion. Aligning these resources with energy transition priorities could effectively bridge the financing gap in renewable energy.

Over the next six months, ISA plans to operationalize the Africa Solar Facility, which will pave the way for the Asia facility’s development. Khanna indicated that initial efforts would focus on Nigeria, which has the largest energy access gap in Africa. “We are working with the Nigeria Sovereign Investment Authority,” he said, further detailing that ISA would invest $15 million into the Africa facility, while the Nigerian sovereign wealth fund is expected to contribute approximately $150 million. The Indian government will also supplement this investment, pending final approval.

Since assuming his role as Director General of the ISA, which is backed by India and France, in March 2023, Khanna has emphasized the organization’s goal of establishing a global solar power hub in India, particularly at its headquarters in Gurugram. He envisions this location becoming the “Silicon Valley” of solar energy.

ISA has already established centers of excellence in twelve countries, including Ghana, Ethiopia, and Cuba. By December, four additional centers are expected to begin operations, increasing the total to sixteen, with plans to expand to fifty in the coming years.

Highlighting the ISA’s educational initiatives, Khanna noted the establishment of the ISA Academy to provide online technical training. An AI-based training platform is also anticipated to launch within six months, alongside the creation of the International Centre of Excellence for solar energy at the Gurugram headquarters, expected to be operational within five years.

Founded in March 2015 during the UN Climate Change Conference (COP21) in Paris, the International Solar Alliance aims to enhance India’s position as a leader in sustainability and a prominent voice for underdeveloped and emerging economies. With the majority of its members from Africa and Latin America, the ISA serves as a strategic platform for advancing solar energy initiatives globally.