Earlier this year, India announced ambitious renewable energy targets, which it hopes will meet growing power demand, provide universal electricity access and increase energy self-sufficiency in the country.
Todd Freeland, director general of the ADB’s private sector operations department, said the ADB’s combination of sovereign-backed and private sector loans represents an “innovative financing solution” providing Powergrid, India’s national transmission company, with a “large, competitive and efficient” source of funding.
The first $500m of the funds will be in the form of a government-backed loan while a further $5m will be non-sovereign lending.
The ADB said in order to fund the company’s significant expansion plans while maintaining affordability for consumers it will need access to all available and competitive sources of finance, from multilaterals, banks and capital markets.
The company’s funding needs for India’s interstate Green Energy Corridor, which looks to facilitate the transfer of power from renewable energy-rich areas to other parts of the country, exceed $3.4bn.
A further $10bn will be needed to enhance overall interregional connectivity, critical for renewable energy advancement, large power transfers and power sector optimisation.
The ADB said its financing will play an important role in helping the country achieve its ambitious targets and increase the overall interregional connectivity. It said its presence as a key lender will help to attract other potential commercial co-financers.
India hopes to achieve a national renewable energy target of 175 Giga Watts by 2022, about 90% of which will come from solar and wind sources which are concentrated in a few Indian states.
The bank’s funds will be used to build inter-state transmission infrastructure to increase delivery between regions. This will bring “clean energy to more people”, make the “overall Indian power system more efficient” and improve the country’s “overall energy security”, said Hun Kim, director general of the ADB’s South Asia department.
