Bidder of India's Lowest Solar Tariff Secures ₹4 Billion Financing From ADB

The Asian Development Bank (ADB) has approved a non-sovereign loan of ₹4.063 billion (~$53.1 million) for Al Jomaih Energy and Water to develop an 80 MW solar project in Gujarat.

A non-sovereign loan is private financing issued by banks when there is no guarantee by a sovereign entity, which includes a national, state government, or a municipality.

Al Jomaih Energy and Water was declared one of the winners in the Gujarat Urja Vikas Nigam Limited’s (GUVNL) (Phase XI) auction for 500 MW solar projects. The auction also set a new record for the lowest (L1) tariff of ₹1.99 (~$0.027)/kWh for any solar project in the country.

According to ADB, the Al Jomaih Solar Power project aligns with the environment and social standards established under the ADB Safeguard Policy Statement 2009 requirements associated with International Finance Corporation Performance Standards and World Bank Group Environmental, Health and Safety Guidelines.

The 80 MW project by Al Jomaih is being developed in the villages of Jhakan and Kataria in Surendranagar district, Gujarat. The land allocated for the project is about 300 acres, leased for 29 years and six months, and is flat to slightly undulating private agricultural land.

The developer will pay a lease rent of ₹33,500 (~$438)/acre per annum for the leased period, with a 5% escalation every three years.

The project is being developed in response to the GUVNL tender floated in September 2020 to purchase 500 MW of power from grid-connected solar projects.

Al Jomaih is also expected to set up the transmission network up to the delivery point at its own cost. The company must also acquire all necessary approvals, permits, and clearances for setting up the project.

According to the project specifications, Al Jomaih is expected to limit the scope of the technology used in the projects to photovoltaic technology, crystalline silicon, or thin-film,  with or without trackers installed. The Gujarat Energy Development Authority will certify the commercial operation date after commissioning the project’s total capacity.

The project’s construction is expected to begin this year and commissioning by 2023. The power generated from the project will be sold to GUVNL under the 25-year power purchase agreement.

Previously, ADB and ENGIE had signed a long-term loan agreement worth ₹4.66 billion (~ $60.88 million) to develop and operate a 200 MW solar project in Gujarat.

According to Mercom Capital Group’s recently published Q1 2022 Solar Funding and M&A Report the total corporate funding—including venture capital (VC) funding, public market, and debt financing—into the solar sector globally came to $7.5 billion through 49 deals in the first quarter (Q1) 2022.