Multilateral funding agency Asian Development Bank today said it would provide Rs 250 crore ($48 million) loan to Reliance Power for its solar energy project in Rajasthan.
"ADB is providing a long-term loan of up to Rs 250 crore to finance the 40 MW Dahanu Solar Power Project located at Jaisalmer in Rajasthan," an official statement said. The project is expected to be completed by the second quarter of 2012.
Rajasthan has one of the highest levels of solar irradiation in India.
"India's solar energy potential is one of the highest in the world and this plant will help kick-start large-scale, private-sector solar electricity generation in the country," said Michael Barrow, Director in ADB's Private Sector Operations Department.
Reliance Infrastructure Ltd will buy the electricity under a long term power purchase agreement to fulfil its renewable purchase obligations set by electricity regulators – the first fully private sector transaction for solar power. The power will be distributed to households in Mumbai.
The plant marks RPower’s entry into the solar energy business and is part of the company’s plans to expand the renewable energy portfolio.
The Export Import Bank of the US is also providing funding for the project that is expected to cost around $147 million, the statement said.
The project will support the government's push to promote environmentally sustainable energy growth while diversifying the country's sources of energy.
By supplying electricity from a clean and renewable source, India will avoid around 41,000 tonne of carbon dioxide emissions a year, had the demand been met by conventional fossil fuel-based power plants, the statement said.
ADB provides partial credit guarantees to lenders willing to fund solar power projects of up to 25 MW. The facility is designed to help reduce risk for the private sector, and to mobilise long-term funding for solar energy development.
ADB aims to help develop, finance and commission 3,000 MW of solar power generation capacity in its developing member countries by mid-2013.
