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Azure Power, a solar energy services provider, is close to raising $10 million from International Finance Corporation (IFC), the investment arm of the World Bank. The funds will be used by Azure, an IPP (Independent Power Producer), for its upcoming projects in states like Punjab, Haryana and Gujarat. The company already has projects of up to 22 MW under development and is in talks to setup projects worth another 30 MW.

Azure plans to build up a capacity of 100 MW by 2013 which will require an investment $300-400 million, said Inderpreet Wadhwa (in pic), CEO of Azure Power India.

"IFC brings in tremendous amount of expertise in doing structured financing in infrastructure space," said Wadhwa. The proposed investment from IFC will be quasi-equity infusion. Azure last year raised an undisclosed amount from India's Helion Venture Partners and US-based Foundation Capital.

Azure's first project, which is located in Awan - 40 kms from Amritsar in Punjab, has been commissioned at 5 MW and started running. The project is in an area where there are issues of reliability on existing power supply and energy security, said Wadhwa, which Azure plans to address. The solar project will cover around 80% of the local substation area and help power 42 communities in the region through the local grid. Besides being the first private independent solar power project in India, the facility will provide power load factory (PLF) that’s highest in the world, claims Wadhwa.

Azure plans to continue with this strategy of setting up plants where there is a deficiency in power supply, focusing on rural and semi-urban areas which might be ignored by large projects. While the company is right now focusing on the utility business, it will also look at commercial projects in the future.

The New Delhi-based firm plans to develop a number of projects with 5 MW capacity, which it says is the most optimal. Azure has three 5 MW projects coming up in Gujarat and one 2 MW project in Haryana. It is also eyeing states like Rajasthan, West Begal and Karnataka for more such projects.

While many companies in the renewable energy space have been investing in assets like hydel, biomass and wind, most have shied away from solar as its much more expensive. Azure's Wadhwa says that per MW cost to his company is $4 million but they have been able to come up with a unique financing model. Besides roping in VC investors, all debt for Azure's projects has been assumed by US Treasury.

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