The Asian Development Bank (ADB) will provide up to $150m in credit guarantees to help India scale up its solar power sector.

The guarantees will be available to local and foreign commercial banks that finance private sector solar power projects in the country.

The guarantees will cover 50% of the payment default risk on bank loans made to project developers and support projects of up to 25MW.

According to ADB, its partial guarantees on loans of up to 15 years will make the longer-tenor loans to solar projects more attractive to banks and the projects.

ADB is also separately considering direct finance for larger solar power projects with the private sector in India.

ADB director general of private sector operations department Philip Erquiaga said that in a world of depleting fossil fuels, solar energy is a long-term, sustainable solution to India’s energy needs and security.