New financing scheme aims to spur solar projects in poorer nations

It covers payment default risk to incentivise such investments, starting with Africa

- Nirmala Ganapathy

Poorer nations often miss out on vital climate cash, but a financing initiative by the International Solar Alliance (ISA), a grouping of 120 countries including Singapore, aims to kick-start solar energy projects in developing nations, its chief said.

Due for launch in October, the Global Solar Facility is a paymentguarantee mechanism to help incentivise investments in poorer countries, said ISA director-general Ajay Mathur, starting with Africa.

The guarantee will cover the financial risk of payment default for solar projects undertaken in African countries, and will also reduce risk for local lenders when they undertake such projects for private entities such as hospitals.

The initiative will be rolled out a few weeks before the 2024 UN climate change conference COP29 in Azerbaijan in November, where climate finance for developing nations is the key issue.

The event is tasked with agreeing on a new global financing goal that takes into account the needs and priorities of developing countries, especially for green energy investment.

With four months to go before COP29, countries are racing against time to agree on the size of contributions from developed nations and other sources for the goal.

Globally, investment in solar energy is growing rapidly because it is cleaner and easy to deploy, and the electricity from it is cheaper than from fossil fuel power generation. This has made solar and wind power deployment crucial to cutting carbon emissions heating up the planet.

But solar investment in Africa in 2023 attracted a mere 3 per cent of the global investment of US$500 billion (S$671 billion), according to ISA.