ADB to Provide $500 Million for Renewable Energy Transmission System in India

The Asian Development Bank (ADB) will provide $500 million to build a power transmission system needed to deliver clean electricity from wind and solar power projects in Rajasthan in Northwest India to the state and national grids.

“Boosting renewable energy is important for Rajasthan and India to meet fast-growing energy needs in a way that is kind to the environment while also improving the country’s energy security by reducing reliance on imported fossil fuels,” said Len George, Energy Specialist in ADB’s South Asia Department. “The proposed transmission investments will also support evacuation of energy produced in large renewable energy parks that bring in economies of scale compared to smaller stand-alone renewable energy projects.”

The Bhadla park in Western Rajasthan is the first solar park that is under development by the Rajasthan Renewable Energy Corporation, the state’s renewable energy agency, to house photovoltaic and solar thermal projects and is part of Rajasthan’s aim to reach about 8,000 MW of solar and wind generation capacity by 2018, largely from the private sector.

Solar energy development is also a key part of the national government’s goal under the Jawaharlal Nehru Solar Mission (JNNSM) to find renewable energy alternatives to fossil fuels to meet India’s fast-growing energy needs. The JNSMM, set up in 2010, aims to deploy 20,000 MW of solar power capacity across India by 2022. A large part of that is expected to be located in Rajasthan, which has one of the highest levels of solar irradiation in India and is home to over 80% of the solar power set up under Phase 1 of the JNNSM.

Work has already started on 75 MW of solar photovoltaic power at the Bhadla park after competitive bidding in early 2013 under the Rajasthan solar policy and a further 200 MW will be added annually starting 2014.

The new power transmission system will involve about 1,850 km of transmission lines, mostly in western Rajasthan, three new 400-kV substations and nine new-220 kV grid substations. The funds will also be used to boost the transmission capacity of seven existing substations. Apart from serving the Bhadla park, the infrastructure supports solar and wind power developments in Western Rajasthan.

The funds comprise a $498 million multi-tranche financing facility including funds from the concessional Clean Technology Fund, and a further $2 million in technical assistance grant that finances infrastructure planning for the Bhadla park, transmission system studies and a community development plan to set up solar power electricity and clean water equipment for small communities. The government of Rajasthan and state transmission utilities will provide counterpart financing of about $300 million.

The second loan tranche of around $220 million is expected to be released later in 2014 and the final loan of around $128 million expected to be made in 2015. The investment program is expected to be completed by early 2018.