Asian Development Bank to lend $500M for renewable energy project in Rajasthan

The Asian Development Bank (ADB) will provide a loan of $500 million (Rs 3,100 crore) to build a power transmission system at the Bhadla park in Rajasthan to deliver clean electricity from wind and solar power projects to the state and national grids, the development financial institution said on Friday.

The loan will be provided in three tranches; the first tranche is worth $152 million. The second tranche of around $220 million and the final loan of around $128 million are expected to be released later in 2014 and 2015, respectively. The investment programme is expected to be completed by early 2018.

The funds comprise $498 million from the concessional Clean Technology Fund and the remaining $2 million in technical assistance grant. The government of Rajasthan and state transmission utilities will provide counterpart financing of about $300 million.

The development comes a day after ADB announced a $400 million package for a water and sanitation programme in the eastern part of the country.

The funds will be used to boost the transmission capacity of seven existing substations apart from serving the Bhadla park, the infrastructure that supports solar and wind power developments in western Rajasthan.

After a competitive bidding early this year under the Rajasthan solar policy, the Bhadla park work has already been started on 75 MW of solar photovoltaic power and a further 200 MW will be added annually starting 2014.

Bhadla park, the first solar park that is under development by the Rajasthan Renewable Energy Corporation, is a part of the state government’s aim to reach about 8,000 MW of solar and wind generation capacity by 2018, largely from the private sector.

“The proposed transmission investments will also support evacuation of energy produced in large renewable energy parks that bring in economies of scale compared with smaller stand-alone renewable energy projects," said Len George, energy specialist at ADB’s South Asia Department.

Solar energy development is also a key part of the national government’s goal under the Jawaharlal Nehru National Solar Mission (JNNSM) to find renewable energy alternatives to fossil fuels to meet India’s fast-growing energy needs. In January 2010, the government had launched JNNSM which set the target of deploying 20,000 MW of grid connected solar power by 2022.

The government has been looking to increase the contribution from renewable energy sources to boost power shortage in the country. Most recently, it finalised plans to set up the world’s largest ultra-mega green solar power project, having a total generation capacity of 4,000 MW, in Rajasthan.

Manila-based ADB is a regional development bank established to promote economic and social development in Asian and Pacific countries through loans and technical assistance. Four months ago, it invested $30 million in NSL Renewable Power Pvt Ltd. Prior to this, it invested $2 million in Bangalore-based Simpa Energy India Pvt Ltd in March and in February, it sold its stake in Kanpur-based Central UP Gas Ltd. Simpa provides clean energy solutions with a pay-as-you-go pricing plan, but is not a power generation firm.

(Edited by Joby Puthuparampil Johnson)

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