ADB Loan Boosts Solar Power in India's Gujarat

News Release | 13 September 2011

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is providing a $100 million loan to the Indian state of Gujarat to help accelerate the rollout of new large-scale solar power facilities.

The ADB Board of Directors has approved the financing for the Gujarat Solar Power Transmission Project. The funds will be used for a substation, transmission lines and other equipment to collect and distribute solar power generated by plants in the Charanka Solar Park in Gujarat's Patan district. The facilities will make it more cost effective for private companies to set up sizeable solar energy generating plants, which will give the sector a significant shot in the arm.

"By putting in reliable power transmission facilities in the solar park, ADB will help draw in private sector developers, while providing a model which can be replicated to scale up solar power in a significant manner in India," said Naoki Sakai, Senior Climate Change Specialist, ADB.

Charanka, which is targeting output of over 500 megawatts (MW), is one of a number of large scale solar energy parks that Gujarat plans to build to meet rising demand for power and to help reduce its use of fossil fuels. The parks will provide developers with the necessary permits and services to fast track the rollout of generation plants. They will also help the Government of India realize its goal of building solar facilities with total generating capacity of 20,000 MW by 2022.

Along with physical infrastructure, the project will provide vocational skills training for up to 300 people in target areas, with 30% of them women, as well as energy-based livelihood programs for up to 100 poor women.

The loan from ordinary capital resources will have a 25-year term, with a 5-year grace period, and annual interest set in accordance with ADB's LIBOR-based lending facility. The Government of Gujarat will provide counterpart funds of nearly $37 million, for a total project cost of almost $137 million. The Gujarat Energy Transmission Corporation and the Government of Gujarat will jointly execute the project.