ADB offers $500 million loan for clean energy

The Asian Development Bank (ADB) Friday said it will provide $500 million loan for transmission system needed to deliver clean electricity from wind and solar power projects in Rajasthan 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 at 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," George said in a statement.

The loan amount will be used to develop new power transmission system of 1,850 km of transmission lines, mostly in western Rajasthan, three new 400 kilovolt substations, and nine new 220 kilovolt grid substations.

The funds will also be used to boost the transmission capacity of seven existing substations. Apart from serving Bhadla Park, the infrastructure supports solar and wind power developments in western Rajasthan.

The loan comprises 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, ADB said.

The investment programme is expected to be completed by early 2018, it said.