ADB Supporting Wind Energy Project of Tata Power in India with Rs3.52Billion Loan

ADB Supporting Wind Energy Project of Tata Power in India with Rs3.52Billion Loan

http://www.adb.org/Media/Articles/2007/11813-indian-energies-projects/default.asp

MANILA, PHILIPPINES - ADB is promoting renewable energy in India by helping to finance the construction and operation of wind energy facilities of the Tata Power Company Limited, India's largest private power company. The project is expected to produce about 100 megawatts of power.

"This project is an important part of international efforts to promote renewable energy development and will contribute to a reduction of greenhouse gas emissions of 2.6 million tons of carbon dioxide during the minimum project life of 20 years," said Takeo Koike, an Investment Specialist with ADB's Private Sector Operations Department.

India is the third largest electricity consumer in Asia behind the People's Republic of China and Japan. Thermal plants, mostly coal-fired, provide 66% of the India's energy capacity. Hydropower accounts for 26% of the capacity, with gas- and oil-fired thermal plants, renewable energy plants, and nuclear plants providing the remaining 8%.

As the Indian power sector has grown, the country has become increasingly dependent on fossil fuels. With the recent hike in oil and gas prices, as well as the expected fossil fuel shortages in the future, the security of the energy supply in India – as well as environmental issues – has generated increasing emphasis on renewable energy.

"India urgently needs to explore sustainable energy development, and the Government has been working proactively to promote the use of renewable energy sources and we are glad we would be partnering with Tata Power to drive this initiative," said Mr. Koike.

The Indian Government has provided support measures to increase renewable energy contributions in the country and has issued policy guidelines for the state governments to establish and maintain policies to promote renewable power projects.

Maharashtra, where the subprojects for Tata Power are located, is one of the leading states in promoting wind power generation. As of September 2006, installed wind power capacity in Maharashtra was 1,242 megawatts, the second most among states in India. From 2003 to March 2006, Maharashtra developed more than 750 megawatts of additional capacity.

ADB will provide an Indian rupee denominated loan of up to Rs3.52 billion, or the equivalent of about $79.3 million, to Tata Power without a government guarantee to set up and operate wind energy facilities at two locations in the state of Maharashtra.

Indian Renewable Energy Development Agency Limited will cofinance with ADB up to Rs910 million. The tenor of the loan will be up to 13 years and will have a fixed interest rate during the entire tenor of the loan.

One subproject, the Khandke Wind Power Project, is near Khandke village in Ahmednagar district, while the other subproject, the Bramanvel Wind Power Project, is near Bramanvel village in Dhulia district.

The project will help India's economic growth and energy diversification in an environmentally sustainable manner and will promote private sector participation in the renewable energy sector in the country.