U.S. Small Business Uses OPIC Loan to Build Solar Power Plant in India
December 8, 2009
WASHINGTON, D.C. – A U.S. small business is using a $6.2 million loan from the Overseas Private Investment Corporation (OPIC) to build a two-megawatt solar power plant in India’s Punjab State – the first megawatt-scale Independent Power Project (IPP) solar facility to sell clean, sustainably generated electricity to India’s grid system. Commissioned last week, the plant will employ advanced solar photovoltaic technology to power 4,000 rural homes, while eliminating as much carbon dioxide pollution as 535,000 trees do annually.
The OPIC loan enabled Azure Power Punjab Ltd. to build the photovoltaic solar plant in the village of Ahwan in Punjab’s Amritsar district. Primary construction involved pouring a foundation upon which solar panels were mounted, and construction of a small building to house generating equipment and monitors. The project exploits the solar passive concept, whereby natural ventilation, passive cooling and daylight are optimally utilized. Power from the plant is transmitted to a substation in the local community.
In addition to OPIC being a partner in this historic first success for private investment in renewable solar power generation in India, the project supports the development of the local community by providing power to developing, rural residential and commercial power consumers, laying a foundation for their economic growth; employing team members and service providers from the area; and utilizing community land that is now generating income for local residents.
The U.S. sponsor of the project is Inderpreet Wadhwa, an American citizen and CEO of Azure Power, Inc., parent company of Azure Power Punjab. Azure Power has its headquarters in San Ramon, California and an office in New Delhi. Also contributing to the project is Foundation Capital, a venture capital firm based in Menlo Park, California and Helion Venture Partners a venture fund based in India.
"I identified distributed medium scale solar power generation as key to energy efficient economic development almost five years ago ahead of national initiatives and international investment in MW-scale solar power generation in India. I took on the task to prove the model of distributed solar power generation at the tail end to enhance the grid as well as the livelihood of communities in rural India," said Mr. Wadhwa.
Previously, there had been no private sector development of solar power projects in India. The only solar projects in the country are small – well less than one MW – demonstration projects or rural electrification projects sponsored by the government, none of which fed into the national grid, nor operated at peak efficiency.
In January 2008, in order to encourage the development of solar power projects, the Indian central government developed a ten-year tariff incentive for solar power developers. Azure Power responded to a tender and signed a memorandum of understanding in April 2008 with the Punjab Energy Development Agency for the project. Azure Power quickly executed its first project and is now developing other solar power plants in Punjab and other states throughout India. Azure Power is the only private operator to have successfully completed a utility-scale solar power plant under the tariff incentive.
India’s need for electricity is significant: 45 percent of the population is deprived of power, with a peak load shortage of 16.6 percent and grid losses of up to 35 percent. The central government has set a goal to add 78,000 MW of capacity and provide access to electricity for 100 percent of the population by 2012. Of that, the Indian government plans to add 15,000 MW capacity from renewable sources. In Punjab, only 0.28 percent of the state’s power is generated by renewable energy generation facilities, primarily hydro and biomass.
"The project represents the best of OPIC: identifying a developmental need in an emerging market and utilizing American entrepreneurial skill to address it, in a way that benefits everyone involved. And it furthers the shared goal of both OPIC and India, to develop renewable energy sources," OPIC Acting President Dr. Lawrence Spinelli said. "We are extremely pleased that we could work with a U.S. small business to make this project a reality."