Actis-backed Spring Energy has achieved financial closure for 250 Mw unit of Rewa Ultra Mega Solar park in Madhya Pradesh. International Finance Corporation, a part of the World Bank Group, is investing $440 million along with domestic lenders in the 750 Mw project.
Besides Spring Energy, IFC would be extending debt to Mahindra Renewables and Acme, the two developers who are also putting 250 Mw each at Rewa. According to Shalabh Tandon, South Asia head, climate business and clean energy, IFC, the other two units would be reaching financial closure soon. IFC is extending a debt of $45 million to each of the project developers besides arranging $100 million each from domestic lenders. “We have shown that low tariffs are financeable. This will set the template for financial closures of other projects.”
The transaction with Actis has been signed for $140 million this week, while $150 million for Acme has been approved by the IFC. The third, with Mahindra Renewables for $150 million, would be going to the board for approval.
The solar park is being developed by Rewa Ultra Mega Solar, a joint venture between Madhya Pradesh Urja Vikas Nigam, an agency of the state government, and the Solar Energy Corporation of India.
The Rewa investments and advisory bolster IFC’s role as a leading player in India’s renewable energy. It has made available more than $1 billion, including mobilisation, to this sector in India. In the last five years, IFC’s investee companies have set up more than 4 Gw of renewable energy capacity in the country, which comes to more than 15% of the increased renewable energy capacity.
IFC has an investment in London-based Actis, a multi-asset emerging market investor with $7.6 billion funds under management.
India aims to have 175 Gw renewable capacity by 2022. On February 2017, the three Rewa units were bid out by the Madhya Pradesh government to Mahindra Renewables, ACME Solar Holdings and Solengeri Power’s Spring Energy at historic low tariffs that work out to Rs 2.97 a unit in the first year and Rs 3.32 over 25 years of contract.
The Rewa solar park has been a model for other solar projects in the country because of its project design and the de-risking of project through a three-tier mechanism including state guarantee and a letter of credit for its developers equal to a month’s payment. A payment security fund will be put in place by RUMSL.