India seeks $500m loan for 4GW solar project, world’s largest

The Indian government is hoping to secure a loan worth $500 million from the World Bank to kick off construction of what would be the largest solar power plant in the world near Sambhar lake in Rajasthan.

The loan, if approved, would finance the first 750MW of the 4GW ‘ultra mega’ solar PV project, which was first announced by the government in November last year. This first tranche is expected to cost around $1 billion in total.

Originally, it was suggested that funding for the project might be provided by India’s parliamentary bill for Corporate Social Responsibility funding, announced in August. The law requires all companies with capital exceeding $100 million to provide 2 per cent of annual net profits towards social or charity work.

But India’s Ministry of New and Renewable Energy last week submitted a proposal for the loan to the Department of Economic Affairs, which will forward the request on to the Washington-based World Bank.

The Sambhar Ultra Mega Green Solar Power Project, which will be located on the 23,000 acre area of Sambhar Salts Limited in Rajasthan, will be built jointly by six state-owned companies – Bharat Heavy Electricals Limited, Solar Energy Corporation of India, Hindustan Salts, POWERGRID, Satluj Jal Vidyut Nigam Limited and Rajasthan Electronics and Instruments Limited.

Once fully completed, the 4GW project is expected produce 6000 million kWh per year to the distribution companies of various states through India’s national grid.

And while it is not part of India’s national solar mission, it is in line with Rajasthan’s 2011 solar policy to tap its significant solar resource through large-scale solar projects and promote the state as a national leader in solar power.

Industry experts have speculated that proposed mega projects like this one will help to lower the cost of solar to be on par with higher priced coal, at INR4.5 per kWh. As of last year, solar power was around INR6 per kWh ($A0.10 per kWh) for large projects.