German development bank KfW has approved a loan for developing a transmission project to support renewable energy projects in India.
According to media reports, the government of Kerala has received nod from KfW for a loan worth Rs 916 crore ($110 million). The funding will enable construction of a transmission project worth Rs 14.5 billion. The transmission project will enable evacuation of power from solar and wind energy projects planned in Kerala.
The loan from KfW would likely be available at a concessional rate of 3-4% (the current benchmark rate India’s reserve bank is 6.5%). The central government will contribute over Rs 1.3 billion towards the project.
The transmission project is part of the Green Energy Corridor program — a nationwide project to set up a network of transmission infrastructure for evacuation of renewable energy.
The first phase of the Green Energy Corridor program was launched in 2015. According to the Ministry of New and Renewable Energy, it had a target to set 9,767 circuit-kilometers of transmission lines and 22.6 gigawatts of sub-stations. As of November 2022, 8,697 circuit-kilometers of transmission lines and 19.8 gigawatts of sub-stations had been commissioned.
The total cost of the program was estimated at just over Rs 100 billion. The central government was to provide a grant to cover 40% of the cost while the state governments were required to invest 20% equity in the individual transmission projects. Balance 40% was to be sourced from KfW in the form of debt at concessional rates.
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