Asian Development Bank (ADB) will be offering $1bn as loan to India to improve the country’s transmission and grid systems.
While $500m will be offered in the form of a government-backed loan to national transmission company, Power Grid Corporation of India (POWERGRID), the rest of the finance support will be allowed as nonsovereign lending.
The country intends to use the funds for developing and upgrading high voltage transmission lines and substations in its states of Rajasthan and Punjab, under the Green Energy Corridor initiative.
The project will also set up new high-voltage direct current terminals in the states of Chhattisgarh, Tamil Nadu, and Kerala, to boost energy delivery from the western parts of the country to its south.
It aims to strengthen interconnectivity between the regions from about 10GW to 16GW.
India intends to reach a national renewable energy target of 175GW by 2022, of which 90% will be derived from solar and wind sources.
ADB South Asia director general Hun Kim said: "The new transmission lines connecting renewable energy-rich areas to the national grid will enhance connectivity between the regions by bringing clean energy to more people, making the overall Indian power system more efficient, and improving India’s overall energy security."
ADB Private Sector Operations director general Todd Freeland said: "The combination of ADB’s sovereign-backed and private sector loans is an innovative financing solution that provides Powergrid with a large, competitive and efficient source of funding.
"Investment in India’s transmission infrastructure complements ADB’s assistance to other private sector energy projects by creating capacity for significant new energy generation, expanding opportunities for power trading, and generally improving the bankability of the renewables market."
Image: The assistance will help improve transmission links, delivering clean power to more people. Photo: courtesy of Asian Development Bank.