The Asian Development Bank (ADB) and Reliance Power have unveiled their plans to build India’s largest solar photovoltaic power plant.

ADB is providing a long-term loan of up to $48m to finance the 40MW Dahanu solar power project located in the Jaisalmer district, in the western state of Rajasthan, which has one of the highest levels of solar irradiation in India.

Electricity generated by the plant will be purchased by Reliance Infrastructure, a private distribution company, under a long-term power purchase agreement.

The agreement will be carried out to fulfill its renewable purchase obligations set by India’s electricity regulators.

Additional funding worth $147m for the project is also being provided by the Export Import Bank of US.

The project aims to support the Indian Government’s drive to promote environmentally sustainable energy growth while diversifying the country’s sources of energy.

Through this project, the country will avoid around 41,000 tons of carbon dioxide emissions every year by supplying electricity from a clean and renewable source.

In addition, the project complements other ADB initiatives that include a financing facility providing partial credit guarantees to lenders willing to fund solar power projects of up to 25MW.

The facility is designed to reduce the risk for the private sector, as well as mobilise long-term funding for solar energy development.

ADB aims to help develop, finance and commission 3,000MW of solar power generation capacity in its developing member countries by mid-2013 as part of its Asia Solar Energy Initiative.

The country’s largest solar project is expected to be completed by the second quarter of 2012.