ADB is providing a long-term loan of up to $48m to finance the 40MW Dahanu solar power project located in Jaisalmer district in the western state of Rajasthan.
Electricity generated by the plant will be purchased by Reliance Infrastructure, a private distribution company under a long term power purchase agreement.
The agreement will be carried out to fulfill its renewable purchase obligations set by India’s electricity regulators, the first time for a fully private sector transaction in solar power.
Furthermore, additional funding worth $147m for the project is also provided by the Export Import Bank of US.
The solar project is expected to be completed by the second quarter of 2012.
The project aims to support the Government of India’s drive to promote environmentally sustainable energy growth while diversifying the country’s sources of energy.
Through this project, the country will avoid around 41,000 tons of carbon dioxide emissions every year by supplying electricity from a clean and renewable source.
In addition, the project complements other ADB initiatives that includes a financing facility providing partial credit guarantees to lenders willing to fund solar power projects of up to 25MW.
The facility is designed to reduce the risk for the private sector, and to mobilize long-term funding for solar energy development.
ADB director in private sector operations department, Michael Barrow said the country’s solar energy potential is one of the highest in the world and this plant will help in generating large-scale, private-sector solar electricity in the country.
ADB aims to help develop, finance and commission 3,000MW of solar power generation capacity in its developing member countries by mid 2013 as part of its Asia Solar Energy Initiative.
