Dr Ajay Mathur, Director General, International Solar Alliance, highlights the steps necessary for achieving a green economy.
NEW DELHI: With the clock ticking away for curbing carbon emissions, the world is looking at International Solar Alliance anew. In an exclusive conversation, Dr Ajay Mathur, Director General, International Solar Alliance (ISA), highlighted the steps necessary for achieving a green economy. With India as the founding member of ISA and President of G-20, New Delhi is showing the way in making solar as the energy of the choice. Excerpts:
Q: Combating climate change and fast-tracking climate finance are major priorities of India’s G-20 presidency. How do you look at the role of G-20 and ISA in advancing this agenda of promoting clean energy?
A: Solar is the main source of providing electricity to billions of people across the world and the cheapest way of doing so. It is also the quickest way to reduce carbon emissions because the net carbon emissions of solar are zero. Consequently, we are seeing a huge amount of solar energy being put up in the developed countries, the OECD countries and in China. We need to ramp up the adoption of solar in other countries. So, the G-20’s efforts must focus on how to do that. The main thing that we would like the G-20 to accomplish is to focus on providing the guarantees that will enable private sector finance to flow into the developing countries where right now solar finance is not flowing. As we have talked to various private investors, they say that their primary concern is the risk associated with non-payment.
We hope that the Solar Fund can be launched during India’s presidency which aims at creating a payment guarantee fund, so that when projects are set up in developing countries, they can buy payment guarantee mechanism risk insurance. At the same time, these projects can also avail of some amount of solar investment that we get from the development banks of the developed countries, which are at low cost. It is not as if they are zero interest, but the interest rate is much less than the commercial rate of interest. This becomes attractive to pull in the private sector, because they see that by mixing their own commercial money with the money of the development banks, it makes for a more attractive scheme. The guarantee funds can be greatly accelerated and enlarged with the help of G-20.
Q: Solar energy is becoming increasingly cost-competitive. Looking ahead, what are ISA’s plans to expand the production of solar energy worldwide? How do you also make it the global energy of the future?
A: It has become increasingly clear over years of negotiations and climate crises that solar energy is the energy source of choice. There are two reasons. First, the falling prices of solar energy. The short-term goal is to make battery storage cost-effective. It is ISA’s estimation that in the next three years, i.e., 2023, 2024, 2025, we will start seeing batteries at a low enough price so that solar plus batteries will be cost effective with fossil fuel electricity. Thus, there will be no rationale for any country and any financing institution to invest in anything except solar plus batteries.
The second part is that we are seeing greater investment in solar energy. In 2021, around 40% of the total investment occurred in solar applications such as solar pumps for agriculture, solar cold storages for solar heating and solar rooftop systems.
Q: Emerging powers will be holding the G-20 presidency for the next three years. And G-20 comprises both developed countries as well as developing countries? How can the rich-poor gap be bridged in solar energy?
A: The key challenge that we have been facing is that the investment occurring in solar is largely occurring in the developed world. Therefore, G-20 must help the non-G 20 countries in making solar the energy source of choice. Obviously, this is a better deal for the world. It also implies that private sector finance flows into solar and that people who do not have access to energy get access to energy. With these benefits, and by the G-20 countries providing the guarantees, we are therefore bridging the gap through solar applications rather than fossil fuel applications.
Q: Looking ahead, green hydrogen is the next frontier in the area of renewable energy. What is the role of the ISA in promoting green hydrogen?
A: Today the cheapest way of making green hydrogen is solar electricity being used to electrolyze water to produce hydrogen. As per the trends, our expectation is that the price of solar electricity would fall by as much as 30% below the current levels by 2050. As the price of solar electricity falls, the price of green hydrogen will also decrease. We recently developed a roadmap for Morocco and Mauritania to use green hydrogen, using solar electricity. The price of solar electricity there is about two and a half dollars per kg of hydrogen. Today, when we reform natural gas to produce hydrogen in fertilizer plants and refineries and so on, the price is already nearly $2 a kg. So, we are getting very close to our goal. In many other countries, the price is much higher—nearly $5 per kg. But given the very high solar installation, this becomes possible.
Q: In ISA, is there a wider acceptance that India can show the way and lead the movement?
A: India has shown the way and as a developing country when it has made those changes that have led to the growth of the solar industry, this is far more credible to other developing countries. So, the African continent sees that India has done this and therefore they realize that it is possible. It is very different from seeing other developed countries having achieved it. But the fact that India has been able to make solar, the energy source of choice, at least during the day right now, is something which other African countries are seeking to copy.
Rural energy access is an area where African countries find the Indian model of the solar mini grid an extremely compelling option to see how at the same time we can meet people’s needs, energy needs, and at the same time also enhance the use of solar energy.
Manish Chand is CEO-Editor-in-Chief, India Writes Network, and India and The World magazine. He is Director, Centre for Global Insights India, a think tank focused on global affairs.