Source: ORF | 02-Dec-2021

Original link: https://www.orfonline.org/expert-speak/indias-international-solar-leadership-walking-the-talk/?amp=

India is leading the charge when it comes to solar projects and initiatives, but it could benefit from building up stronger approaches to monitoring and public accountability

Prime Minister Narendra Modi wants India to lead internationally on solar development cooperation. The government’s political leadership is impressive. It led the establishment of the International Solar Alliance (ISA), now an operational institution; and at COP26, India and Britain announced the Green Grid Initiative–One Sun, One World, One Grid, an initiative to interconnect national grids for the mass transport of solar electricity.

But is India walking the talk with current programmes for cooperation? This piece argues that through ISA, and separately from it, India is demonstrating leadership in three main areas: Finance, sharing policy expertise, and on training. Going forward, however, it suggests the government should more comprehensively collect data and report on activities, to allow for full assessment of its cooperation, if it is to enhance its leadership.

Under the scheme, India’s publicly owned Export-Import (EXIM) Bank extends low interest lines of credit to partner countries.

Concessional Financing

India has earmarked US $2 billion to international concessional financing for solar by 2025, operationalised through the long-running Indian Development and Economic Assistance Scheme (IDEAS). Under the scheme, India’s publicly owned Export-Import (EXIM) Bank extends low interest lines of credit to partner countries. Borrowing governments propose projects, which must be delivered by Indian companies and primarily use Indian goods and services.

The Indian government can point to a strong start here. EXIM Bank has already disbursed approximately US $187 million to nine countries. The government has agreed to a further 27 projects, totalling over US $1.46 billion, which must now pass financial and technical appraisals. Most are for the installation of off-grid solar, where Indian companies have long-standing expertise. These include a project for streetlights in Sierra Leone, and an eight-megawatts solar system in Mauritius. But the bulk of financing by value is for utility-scale solar parks, including in Kenya, Cuba, and Bangladesh. The government’s next test will be to deliver these, which to date are still paper agreements only.

India’s EXIM Bank reports the headline value of agreed lines of credit. Beyond this, no data is released on how projects are structured, the disbursement of funds, the status of projects, or on outcomes, whether operational or developmental.

Moving forward, the government would benefit from more focus on data collection and reporting. India’s EXIM Bank reports the headline value of agreed lines of credit. Beyond this, no data is released on how projects are structured, the disbursement of funds, the status of projects, or on outcomes, whether operational or developmental. Why does this matter? The systematic collection and publication of data on objectives, progress, and outcomes is critical to the government evidencing sustainable economic and political partnerships as well as ensuring transparency and accountability, domestically and with partner countries.

Expertise in Policy

Another contribution India is making is in sharing policy, regulatory, and institutional expertise gleaned from domestic experience. The government is doing this in three main ways.

First, it is supporting other countries to develop utility-scale solar parks. The Indian-led ISA has initiated a solar parks programme. The government of India has further funded a project preparation facility, to be offered by India’s EXIM Bank. This facility is promising ISA members access to technical support for Indian-financed projects. Finally, ISA is working on mechanisms for affordable private finance. The Modi government sees an opportunity for countries to follow its own model of privately-financed parks.

NTPC Limited has agreed to project management consultancy contracts for a 500-megawatt park in Mali, and a 285-megatwatt park in Togo.

ISA is currently cooperating on solar parks in 10 countries. The Indian public energy conglomerate NTPC Limited is ISA’s delivery partner on this. NTPC Limited has agreed to project management consultancy contracts for a 500-megawatt park in Mali, and a 285-megatwatt park in Togo. It has a Memorandum of Understanding to implement forty-seven solar projects. ISA also worked on the development of the World Bank-led Solar Risk Mitigation Initiative, which uses public financing to unlock private financing.

On solar parks, India is expanding a promising area of cooperation. The challenge for the government now is to show that ISA-supported solar parks can secure affordable financing. This will be hard. India’s own domestic experience is that private finance has flowed mostly to utility-scale solar parks in richer States perceived as well governed. ISA will need to partner with multilateral financing institutions and other governments that can offer public finance to develop blended finance mechanisms.

As ISA-supported solar parks are developed, Indian leadership will be tested by how land for projects is secured, and transparency around the contracting of companies. The issue of land is often politically fraught, and projects must ensure existing owners and users are appropriately consulted and compensated. As with concessional financing, reporting will be critical to showing that partnerships are economically and politically sustainable.

ISA will need to partner with multilateral financing institutions and other governments that can offer public finance to develop blended finance mechanisms.

Second, India is promoting demand aggregation for the deployment of off-grid solar goods overseas, through ISA. Put simply, this is a policy to bulk buy and distribute solar goods. ISA has a current programme running tender processes to discover the lowest prices at which manufacturers will supply various off-grid solar goods. The theory is that this will lead manufacturers to lower costs. India had significant domestic success with this policy, most notably bulk buying hundreds of millions of LED lights.

The government can claim some progress with an ambitious agenda. ISA has already run a tendering process for 270,000 solar-power water pumps, for use by farmers to irrigate land. It reports that manufacturers reduced asking prices by over 50 percent. It is now planning a tendering process for a massive forty-eight million Solar Home Systems. ISA is yet to demonstrate, however, viable finance or distribution models for demand aggregation.

Third, India wants to support partner countries to deploy solar mini-grid systems, drawing on its domestic expertise. ISA is running a dedicated mini-grids programme, focused on identifying business models to scale their deployment. ISA says it has carried out assessments for mini-grid potential in five African countries, and has published a draft mini-grid policy.

Cooperation here is yet to gain traction. ISA is still to demonstrate business models, financing mechanisms, and to set out how its support of micro-grids links with development objectives. Numerous international development organisations have solar mini-grid programmes, and it would be valuable for India to clarify what it is offering in this crowded space.

Training and Knowledge Exchange

The government is committed to capacity building through training and knowledge sharing. India has long offered technical and policy solar courses through the country’s flagship Indian Technical and Economic Cooperation (ITEC) training scheme.

Numerous international development organisations have solar mini-grid programmes, and it would be valuable for India to clarify what it is offering in this crowded space.

ISA has been developing a ‘STAR-C’ programme, to build a network of technical training, entrepreneurship, and research and innovation centres. It has further partnered with India’s ITEC to offer a Master’s level trainers programme, and is offering ‘Solar Fellowships’ for mid-career professionals. PM Modi has said that India will fund 500 training places annually for ISA members. India has a strong track record here, and both ITEC and ISA training will be offered to many more in the coming years.

Transparency and Accountability

India is demonstrating leadership on solar with concrete programmes, showing it is walking the talk. As India’s solar cooperation evolves, data collection and reporting are two important areas the government might focus more on.

Currently, publicly available data provides little information about the objectives, progress, and outcomes of India’s programmes, and comprehensive assessment is accordingly difficult. India is not alone in this, other countries also often provide limited information on the outcomes of projects. But for the government to substantiate its leadership, it should give more attention to making financing, projects, and impacts more transparent. India’s commitment is clear, but it could reap many benefits, along with other stakeholders, by building up stronger approaches to monitoring and public accountability.