The power plant worth around $415m will be located near the village of Dhursar in the Jaisalmer district of Rajasthan, and is is expected to be completed in May 2013.

ADB Private Sector Operations Department director Michael Barrow said the 100MW power plant will help meet growing energy demand in India, in a way that avoids emission of harmful greenhouse gases.

"We hope that the success of this project will spur others to invest in the solar energy sector, which has massive potential in India," Barrow said.

The plant will share a transmission line with the adjacent 40MW Dahanu solar photovoltaic plant also partly financed by the Bank.

The electricity generated by the facility will avoid about 250,000 metric tons of carbon dioxide emissions every year, compared to the energy produced by a conventional fossil fuel plant.

Under the first phase of Jawaharlal Nehru National Solar Mission (NSM), Reliance Power was selected to develop 470MW of concentrating solar power capacity.

In addition to ADB’s loan, the power project will also receive funds from other bilateral agencies and local commercial lenders.

Under the NSM, the country intends to have 2GW of installed solar power generation capacity by 2013, 10GW by 2017, and 20GW by 2022.