India's solar power sector gets $150 million in credit guarantees from ADB

By eGov Innovation Editors | Apr 26, 2011

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MANILA - The Asian Development Bank (ADB) said it will provide up to $150 million in credit guarantees to help India develop solar power as a major renewable energy source.

"Solar energy is ideally suited to India because it has available land with strong sunlight. Solar plants are easy to install, even in remote communities that currently have no other access to energy, suit small-scale demand, and are relatively cheap to operate and maintain," said Philip Erquiaga, Director General of ADB's Private Sector Operations Department. "In a world of depleting fossil fuels, solar energy is a long-term, sustainable solution to India's energy needs and security."

ADB said India's solar energy potential is among the best in the world with around 300 sunny days a year. However, companies have been slow to tap that potential because of the high up-front costs of solar plants and a lack of affordable long-term finance from banks.

ADB's partial guarantees will make loans to solar power projects more attractive to banks and help mobilize long-term funding for solar energy development to support India's government in its effort to diversify its energy sources.

Under the scheme, the guarantees will support projects of up to 25 megawatts but ADB said it is also separately considering direct finance for larger solar power projects.

The Jawaharlal Nehru National Solar Mission was set up by the government last year expecting to be able to commission 20,000 megawatts in grid-connected solar power by 2022.

The first step to that goal is building smaller plants that can ultimately be scaled up, ADB said.