KEY POINTS
- MIGA and ISA launched a solar facility to expand access in sub-Saharan Africa.
- The facility will lower risks for investors through concessional financing.
- The goal is to connect 300 million people to electricity by 2030.
A new global fund has been launched to help solar energy grow and mature at a faster pace, particularly in the sub-Saharan Africa region.
MIGA has partnered with the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) to establish the MIGA-ISA Solar Facility. This policy is intended to enable over millions of people in Africa to receive electricity through solar projects.
How the solar facility will work
The MIGA-ISA Solar Facility integrates ISA’s technical competence in engineering and MIGA’s capability in mobilizing funds.
Together, these organizations will ensure that the costs of solar projects are reduced and that more private investors are attracted to the projects.
How this will happen is that concessional financing tools such as first-loss instruments will be used to minimize investors’ risks. It will also offer reinsurance capacity will help to back up solar projects, which seems to be an important issue.
The first phase of its development will focus on increasing the availability of solar power in sub-Saharan Africa where access to electricity remains limited.
Eventually, the project will spread globally, but for now, its mission is clear: link 300 million new electricity consumers in sub-Saharan Africa by 2030. This goal is consistent with current initiatives by the World Bank Group and the African Development Bank.
Promoting the development of solar energy in Africa
The signed memorandum of understanding outlines cooperation between MIGA and ISA regarding the initiation of new solar power and distributed energy projects in eligible developing countries.
Its first large-scale project is already on the way in the Democratic Republic of Congo. Under MIGA guarantees and ISA financing, operating costs could be cut to as much as 20 percent consequently lowering electricity tariffs charged to consumers.
Approximately 675 million people today have no access to electricity, which is a global issue, but the greater part of the affected population lives in Africa.
Indeed, if no improvements are made, 660 million people will continue to have no access to electricity by 2030. The MIGA-ISA Solar Facility is the key to ending this situation by attracting private funding and offering risk management that will allow solar projects to thrive.
To facilitate the investors’ entry into these projects, MIGA has agreed to furnish guarantees that will significantly reduce the financial risks associated with these projects.
