India wins funding for solar power drive

The International Finance Corporation is investing in India’s first commercially viable solar power project, giving a vote of confidence to the country’s ambitions to develop the technology.

The IFC’s investment in Azure Power Private, India’s first “megawatt-scale” solar power developer, comes at a time when the country is keen to build its capability in this technology to compete with China. Beijing controls about 43 per cent of ­capacity in the solar power industry.
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The $10m (€7.4m, £6.6m) investment comes as a decline in the industry’s raw-material prices is making the technology more commercially viable, particularly in emerging markets. Prices for polysilicon have fallen to about a quarter of their former peak.

“With the reduction in the pricing of solar panels, the break-even point has moved down dramatically,” Lars Thunell, the IFC’s Washington-based chief executive, said in an interview.

The push by the IFC, the World Bank’s private sector arm, into solar power comes as private sector funds are also targeting India’s generating companies, including those with significant portfolios of renewable energy.

A consortium of funds, including Morgan Stanley Infrastructure Partners, General Atlantic and Goldman Sachs Investment Management, invested $425m in Asian Genco, a Singapore-based company building power plants in India. That was one of India’s biggest private equity deals in the past two years and will include a large hydropower project in Sikkim state.

India is engaged in a vast expansion of power infrastructure to drive its rapidly growing economy and aid its 1.14bn population, more than half of whom do not have access to electricity. The country is seeking to increase its solar power generation capacity from near zero today to 20,000 megawatts by 2022.

The Azure project also provides a precedent in India for connecting solar plants to the national grid. This method could be used for future similar projects by other producers.

Founded by a young entrepreneur, Inderpreet Wadhwa, Azure is India’s first solar plant large enough at 2MW to be considered “utility scale”. When connected to the country’s electricity grid, the plant supplies power to 20,000 people in 32 villages in the Amritsar district of the Punjab.

“It’s small right now but the ambition is to grow very quickly and scale up,” said Anita George, IFC infrastructure director for Asia.

The IFC, meanwhile, has been rapidly increasing its investment in renewable energy, allocating $720m to the area last year compared with only $65m five years earlier.

Mr Thunell said the group was planning increases in its total investment in renewable energy and other climate-related areas, depending on the availability of capital from the IFC board.

“We want to double our investment in that area,” he said.

In a project in Senegal, the IFC has a 25-year electricity distribution concession to provide power to 20,000 households in nearly 300 villages. It will do this through grid-connections and individual solar kits, helped by a government subsidy for connection costs.