250 Megawatt Project At Landmark Indian Solar Park Gets $146 Million Funding

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Mahindra Renewables has announced that it achieved financial closure for a project it was awarded at the Rewa solar power park.

Mahindra Renewables won the rights to develop a 250 megawatts (AC) project in the Rewa solar power park in the state of Madhya Pradesh in 2017. Two other companies, Acme Solar and Solenergi, ‌also won 250 megawatts of capacity each in the solar park. 

Mahindra is believed to be the first one to report financial closure. It reported that multiple banks and financial institutions pooled in ₹950 crore ($146 million) in debt funding for the project. The consortium of lenders was led by Yes Bank which has lent to Mahindra for several years and for nearly 400 megawatts of capacity. Mahindra and the other two developers are scheduled to commission their projects by the end of this year.

A landmark project

The Rewa solar power park is considered a landmark in India’s National Solar Mission. Projects that constitute the park were the first to witness tariff bids of less than ₹3.00/kWh (4.62¢kWh). While all three developers placed bids of ₹2.97, the levelized tariff for the 25 year period would be around ₹3.30kWh (5.08¢/kWh) as there exists a provision for fixed escalation in the tariff on an annual basis.

This is also the first solar park where the International Finance Corporation agreed to fund the transmission infrastructure and network at a low rate of 0.25%. The actual lending rate may be higher after accounting for the rates of the last lending firm in India. Still the lending rate is lower than what any Indian bank could have offered.

Tender documents of the solar park also had several developer-friendly clauses, such as the provision to sell electricity in the open market if designated buyers refuse to buy it. An official in Mahindra Renewables stated that the power purchase agreement for this solar power park is among the most bankable in the country and should serve as a model for all upcoming projects in the country.

It is also the first solar power park in India which will supply electricity to an entity other than a power distribution company. Around 22% of the expected 525 million kWh electricity expected to be generated every year would go to the Delhi Metro Rail Corporation.