India-World Bank Ink $100 Million Loan Agreement For Clean Energy

The solar parks will be mostly under the Ministry of New and Renewable Energy’s (MNRE) Solar Park Scheme.

In a significant development, India and the World Bank have signed a $100 million loan and a grant agreement to help the country increase power generation capacity through cleaner, renewable energy sources.

In a statement the World Bank said, “The Shared Infrastructure for Solar Parks Project will finance Indian Renewable Energy Development Agency Ltd (IREDA), to provide sub-loans to states to invest in various solar parks.”

Sameer Kumar Khare, Joint Secretary, Department of Economic Affairs, Ministry of Finance, on behalf of the Government of India and Hisham Abdo, Acting Country Director, World Bank India, on behalf of the World Bank, has signed the agreement. K S Popli, Chairman and Managing Director, on behalf of IREDA also signed the loan agreement.

The solar parks will be mostly under the Ministry of New and Renewable Energy’s (MNRE) Solar Park Scheme.

The funding has two components, a USD 98 million loan from the International Bank for Reconstruction and Development (IBRD), which has a 5-year grace period, and a maturity of 19 years. It also includes USD 23 million loan from the Clean Technology Fund (CTF) has a 10-year grace period, and a maturity of 40 years. The second component is $2 million technical assistance under CTF grant.

The first parks that would be financed under this project are in the Rewa and Mandsaur districts of Madhya Pradesh, with targeted installed capacities of 750 MW and 250 MW respectively, it said. Other states where potential solar parks could be supported under this project are in Odisha, Chhattisgarh and Haryana.

According to Sameer Kumar Khare, the objective of this project is to push solar technology penetration in the country. “This Project will help establish large-scale solar parks and support the government’s plan to install 100 gigawatts (GW) of solar power out of a total renewable-energy target of 175 GW by 2022,” Khare said.

This project will facilitate increase in electricity generated in solar parks and add to India’s clean power generation capacity. “India’s goal of scaling up the provision of clean energy will require a vibrant market for solar investments,” said Hisham Abdo, Acting Country Director, World Bank India. “The challenge for this project is to go beyond investments; it is to deepen the solar market,” he added.

This project is one in a series of engagements requested by the Government of India from the World Bank in the solar power sector. “Through this engagement, it is expected that the investments will boost market confidence, enable demonstration of economies of scale in large-scale grid-connected solar generation, contribute towards pushing down equipment and transaction costs, increase efficiency while reducing unit costs of solar power, and catalyze further support from other investor groups to help India achieve its ambitious target of installing 100 GW of solar power capacity by 2022,” said Surbhi Goyal, Senior Energy Specialist and World Bank’s Task Team Leader for the project.