The World Bank will provide the Government of India with $100 million to help the country develop large-scale solar parks in an effort to help India increase its power generation capacity through renewable energy sources.
Announced on Monday, the Government of India and the World Bank signed a $98 million Loan Agreement and a $2 million Grant Agreement which will go towards providing Indian states with sub-loans to invest in large-scale solar parks, primarily under India’s Ministry of New and Renewable Energy’s (MNRE) Solar Park Scheme.
The Agreements were signed by Sameer Kumar Khare, Joint Secretary, Department of Economic Affairs, Ministry of Finance, on behalf of the Government of India; K S Popli, Chairman and Managing Director, on behalf of IREDA; and Hisham Abdo, Acting Country Director, World Bank India, on behalf of the World Bank.
The first two large-scale solar parks to be supported under the Shared Infrastructure for Solar Parks Project which will finance the Indian Renewable Energy Development Agency Limited (IREDA) are in the Rewa and Mandsaur districts of Madhya Pradesh, and will have expected installed capacities of 750 MW (megawatts) and 250 MW respectively.
“The Government of India is committed to set-up an enabling environment for solar technology penetration in the country,” said Sameer Kumar Khare, Joint Secretary, Department of Economic Affairs, Ministry of Finance. “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. The use of this clean and green technology will also help contribute to global efforts to meet the challenges of climate change.”
Future projects that might fall under the new financing loans include solar parks in the states of Odisha, Chhattisgarh, and Haryana. IREDA will use the financing to fund common infrastructure such as power pooling substations, intra-park transmission infrastructure and provide access to roads, water supply and drainage, among others.
“India’s goal of scaling up the provision of clean energy will require a vibrant market for solar investments,” added 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.”
India is focusing heavily on building its solar capacity — having installed 4.8 GW (gigawatts) worth of solar in the first half of 2017, exceeding its installations throughout all of 2016 — and has engaged the World Bank and the International Finance Corporation (IFC) in supporting their goals.
“IFC is pleased to participate in India’s ambitious solar power agenda to address the country’s energy needs,” said Jun Zhang, IFC India Country Head. “To achieve this, large-scale solar projects have to be bankable. By assisting the government in the Rewa solar project, IFC has demonstrated that robust project design, innovative de-risking and contract structuring can help attract global investors to the project. With important outcomes of open access, large-scale and grid parity, the Rewa solar project paves the way for many more large-scale solar projects in the country.”