ISA Partners with MIGA to Establish Trust Fund for Solar Projects, Focusing on Sub-Saharan Africa

The fund will merge the International Solar Alliance's technical expertise with the Multilateral Investment Guarantee Agency's financing capabilities to accelerate the worldwide adoption of solar energy.

The Multilateral Investment Guarantee Agency (MIGA), part of the World Bank Group, and the International Solar Alliance (ISA) have announced the launch of the MIGA-ISA Solar Facility, a multi-donor trust fund aimed at reducing the cost of solar power projects worldwide. Initially focusing on Sub-Saharan Africa, this facility was catalyzed by India's push to expand global access to renewable energy.

Innovative Mechanism for Global Solar Expansion

The new facility will leverage ISA’s technical expertise and MIGA’s financing mobilization capabilities. Together, they will offer innovative financing tools, such as concessional financing, first-loss instruments, and reinsurance, aimed at improving the bankability of solar projects while lowering the cost of MIGA guarantees. These measures will help attract private capital for solar initiatives in eligible developing countries.

According to a statement from ISA, this collaboration will play a crucial role in scaling up distributed-energy projects across the global south, aligning with initiatives from both the World Bank and the African Development Bank. These organizations aim to secure 300 million new electricity connections in Sub-Saharan Africa by 2030, highlighting the transformative potential of this solar initiative.

Driving Private Investment for Solar Projects

Administered by MIGA, the facility aims to increase the issuance of guarantees, making solar power projects more appealing to private investors. These guarantees will provide essential risk mitigation, particularly for distributed energy projects, and help lower project costs, thereby closing the energy gap in underserved regions.

Hiroshi Matano, MIGA's executive vice president, expressed optimism about the facility's impact, stating, "MIGA is delighted to host the MIGA-ISA Solar Facility and support Sub-Saharan Africa in accessing reliable and clean electricity. The facility will attract private investment through risk mitigation and concessional financing, reducing costs and addressing the energy deficit in these regions."

ISA’s Global Solar Facility and Its Role

ISA has already committed $2 million in seed funding for the facility, with the goal of raising an additional $10 million. This project is part of ISA’s broader Global Solar Facility (GSF) initiative, which seeks to raise $200 million to fund solar projects across Africa.

ISA Director General Ajay Mathur emphasized the significance of this partnership: "This is an important milestone in the rollout of ISA’s GSF. We look forward to delivering clean energy to millions of Africans who remain off-grid."

First Solar Project in Congo Launched

The partnership's first project will be in the Democratic Republic of Congo, where MIGA guarantees and ISA financing are expected to cut operational costs by 20%, resulting in lower tariffs for local consumers. This development highlights the facility's role in ensuring affordable, clean energy for underserved communities in Africa.

The MIGA-ISA Solar Facility is poised to play a transformative role in boosting solar energy adoption globally, particularly in regions that have traditionally faced challenges in accessing clean electricity.