The first commercial utility solar project in India received a $10 million investment from a World Bank affiliate as the international lending agency steps up its support of renewable energy in emerging economies.
The World Bank Group has pledged to increase its investments in alternative energies by more than 20% a year. In fiscal 2009, the group boosted support by 24% to $3.3 billion.
The investment in India’s Azure Power Private solar project came from the International Finance Corp., the private sector arm of the World Bank Group. It marked IFC’s first investment in solar power and its first clean tech investment in South Asia.
In fiscal 2009, IFC invested twice as much in renewable energy projects as in conventional energy, putting $1.034 billion into renewable energy and $512 million in oil, gas, and coal extraction and energy projects. For the first time, more than half of IFC’s power projects – 12 out of 18 – were in renewable energy. The agency has increased its renewable energy investments by an average of 51% a year for the past four fiscal years, from $221 million in fiscal 2005.
The Azure Power project, once fully operational, will expand photovoltaic capacity to produce more than 20,000 megawatt hours of clean energy annually to reach a hundred villages in several Indian states. Two venture capital funds, Helion Venture Partners and Foundation Capital, provided a first round of financing in 2008 and also participated with IFC in this round. One of the objectives of IFC support is to help attract private-sector financing.
India is just starting to develop solar power and significantly lags China in this regard. The country has pledged with the support of the World Bank and IFC to invest $19 billion in National Solar Mission to develop 20,000 megawatts of solar energy capacity over a 30-year period.
A third of India’s population lacks access to electricity. Frequent power shortages, with peak gaps at 11 percent, hamper the country’s industrial competitiveness, IFC said. “The project…will go a long way in contributing to the development of the solar power generation sector,” said Anita George, IFC’s infrastructure director for Asia.
By Darrell Delamaide