Affordable Solar Power For All

The 21st century is undergoing a historic energy revolution. Solar is at the heart of this revolution because of its ability to bring clean and affordable energy to all. This is why energy, industry and finance global leaders decided to launch the Terrawatt Initiative (TWI), the first private non-profit organization whose goal is to provide the necessary conditions to unleash the full potential of solar power.
After the Paris Agreement, It Is Time for Action
The Paris Agreement will come into force on November 4th 2016, less than a year after being reached –  much faster than expected.
Now the focus is to find ways and means to contain global warming ‘well below’ 2 degrees Celsius over pre-industrial levels.
This agreement is a major trust factor for the transition to a sustainable energy future. It is expected to foster a virtuous circle of policy support for renewable power generation along with large-scale deployment, substantial cost reductions and technological improvements. We, as TWI, believe that especially for emerging countries, such a development of renewable generation could be an unprecedented opportunity.

Affordable Solar Power is at the Heart of TWI

While COP 21’s ambitions clearly called for a reduction in global greenhouse gas emissions, almost 20 per cent of the world’s population still lacks access to electricity. Any village and community with high solar exposure should no longer be in the dark. Ensuring access to affordable and clean energy makes up the Seventh Sustainable Development Goal (“SDG”) adopted by world leaders in September 2015.
“Any village and community with high solar exposure should no longer be in the dark”
We, as TWI, believe that education, social emancipation and gender equality cannot all be addressed without massive increases in energy supply in developing and emerging countries. It is our responsibility not to leave aside those who are deprived of energy today and who are largely the most vulnerable to climate change.
Reaching the 16 other SDGs depends heavily on the implementation of the 7th SDG, because economic growth and access to low-carbon energy are closely intertwined.
Reaching mitigation target will require a massive replacement of existent capacity by solar power.
And reaching adaptation objective will require affordable power deployment, starting with the countries of the International Solar Alliance.
At US$30/MWh solar production energy, these objectives can be achieved. Today, US$30/MWh solar power is already a reality, making solar power the most competitive source of globally deployable electricity.

Massive Solar Deployment is the Most Concrete Way to Tackle Adaptation Issues

We estimate that a 2.5 TW deployment (ca. 800 MW/day) is needed to meet both the COP 21’s gas emissions objectives and the UN’s energy access goals and adaptation issues.
How to rise to this challenge? Renewables can only replace fossil fuel generation if they are more competitive and on a level playing field. The solar industry has now reached a critical size and maturity, allowing major improvements in the development & financing process. While for most of other technologies the cost of electricity production depends on three main parameters: the investment cost, the cost of capital and the cost of fuel, solar – like most renewables – is only determined by the first two. With no fuel required, the costs are essentially concentrated at the beginning of a project. And as solar photovoltaic technology is very capital intensive, the cost of capital has a considerable influence on the cost of solar-powered electricity.
All countries enjoying sufficient solar resources should benefit from a comparable level of price, making the choice of solar energy a rational decision everywhere. Yet this has not been the case, because of two main reasons. On the one hand, systemic constraints arising from inefficient regulations, and market practices negatively affect the cost drivers. On the other hand, the lack of adapted mitigation tools on macro-economic risks prevent most of the countries from accessing important affordable private capital.

A Shift of Paradigm

Solar power generation is no longer a technology issue but a financial and legal one, which makes it inherently solvable – should everyone join forces to tackle it.
COP 22 should clearly set as its number one priority the goal to reach a ‘new equilibrium below US$30/MWh’ everywhere by mobilizing private finance, in order to reduce the cost of solar power as fast as possible in as many economies as possible.
To that end, all necessary steps should be taken to streamline capital expenditure and reduce the cost of capital through simple and efficient levelized cost of energy (LCOE) driven by local regulations, simplification and adaptation of market contractual practices and management of residual macro-economic risks.
Since its foundation in November 2015, a great deal has been achieved by TWI on addressing regulation issues – together with the International Solar Alliance (launch of the Affordable Finance at Scale programme), and contractual issues – together with the International Renewable Energy Agency (launch of the Solar Energy Standardization Initiative). This work clearly needs to be continued and even accelerated. But the urgency is clearly now on addressing the macro-economic risks (especially counterparty, and long term forex), should we wish to give birth to a global solar power market.

Cracking Climate Finance

Parties have decided to make the next COP in Marrakech a ‘COP of Action’, particularly dedicated to the implementation of the Paris Agreement in emerging countries. To us, members of TWI, energy access must be at the core of our leaders’ attention in November, as a vital and complementary issue to greenhouse gas emissions reduction.
If the COP 22 had to result in a single decision in the energy sector, it would be to commit the Green Climate Fund to design and finance solar mitigation tools.
Providing access to affordable, reliable, sustainable and modern energy for all is for our hands to grasp. It is time to create the right conditions for the private sector to deliver such a promise.

About the Author

Isabelle Kocher is currently Chief Executive Officer of ENGIE (previously GDF Suez). She joined the Suez Company in 2002 (then GDF-Suez, now ENGIE) within which she has held functional and operational positions for 12 years. Earlier in her career, Ms Kocher worked for various government bodies in Paris, including as an industrial affairs advisor to the Prime Minister’s office.
She is also Chairperson of the Terrawatt Initiative, a global non-profit organization gathering private actors, designed to promote the production of affordable solar energy across the globe. It is an operational initiative dedicated to preparing concrete tools and platforms in order to make large scale solar development a reality. Terrawatt Initiative is organizing the ‘Solar Generations Day’ in 2017 to raise public awareness on this issue.
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