The Export-Import Bank of the US has approved a $80.32 million (over Rs 400 crore) direct loan for Anil Ambani-led Reliance Group firm R-Power’s purchase of solar power technology from American companies.
The technology would be purchased from companies in eight states of the US and would be used for R-Power (Reliance Power) solar energy project in Rajasthan, India.
The Exim Bank said that its board has approved the loan for this project, named Rajasthan Sun Technique Energy Private Limited — a subsidiary of R-Power and being co-financed by Asian Development Bank and Dutch development bank.
The US companies involved in the transaction include AREVA Solar Inc, EI DuPont de Nemours and Co, Clifford Chance Rogers Wells LLP, 3M Company, Sika Corp, CCI Corp, Certainteed Corp, Huck International Inc and Weed Instrument Company Inc.
R-Power recently commissioned the country’s largest solar project, with a capacity of 40 MW, in Rajasthan and plans to add another 100 mega watt capacity in the next one year.
After commissioning of the plant, group chairman Anil Ambani had said that R-Power plans to invest more than Rs 6,000 crore for solar projects in Rajasthan in two years.
R-Power is looking at doubling the capacity to 300 MW in the next 24 months, entailing an investment of more than Rs 6,000 crore. The 40 mega watt plant has been set up at an investment of about Rs 700 crore.
“R-Power’s vision is to become India’s largest green power company and the commissioning of this solar project is the first major step in that direction,” Ambani said.
Commenting on the latest Exim Bank loan, its Chairman and President Fred Hochberg said: “This transaction will give renewable energy US exporters a larger footprint in India, and it will help them be competitive against the German and Chinese companies in this field.”
“We are excited to be at the forefront of financing this innovative technology and meeting the demands in India for cutting-edge, American-made solar equipment,” he added.
The loan would help support jobs at the US companies, Exim Bank noted.
Areva Solar CEO Bill Gallo said the Ex-Im Bank loan is an important component in helping US companies and its subcontractors compete for and execute solar energy projects in a competitive global market while creating American jobs and economic growth.
R-Power CEO J P Chalsani said this is the second loan approval by Ex-Im Bank in the company’s renewable energy initiative.
“Our strategic tie-up with Ex-Im is unmatched in terms of its scope and size. This partnership plays an important role in meeting India’s growing energy needs,” said Chalasani, who also discussed export potential for the US companies during a session at the the Ex-Im Bank’s 2012 Annual Conference.
Under the Exim Bank-approved transaction, R-Power will purchase a concentrated solar power technology, known as compact linear Fresnel reflector (CLFR) from AREVA Solar Inc.
CLFR technology boils water using a series of rotating flat mirrors to concentrate sunlight onto a central elevated system of tubes that contain water. The solar system produces superheated steam that is collected in a piping system and transported to a steam turbine to produce electricity.
This project along with the Kogan Creek Solar Boost Project in Australia (44 MW under construction) are the first to use technology of this kind from AREVA Solar on a large commercial scale.
During US President Barack Obama’s India trip in November 2010, Hochberg had signed a $five billion Memorandum of Understanding (MOU) with R-Power Chairman Anil Ambani.
The MOU proposed purchase of 900 megawatts of renewable energy generating equipment, in addition to the purchase of 8,000 MWs of gas-fired technology from US manufacturers and service providers over a period of five years.
Since then, Ex-Im Bank has financed $760 million in three R-Power renewable energy transactions supporting 165 megawatts of solar and 2400MWs of gas.
Since fiscal year 2011, Ex-Im Bank has financed seven Indian solar power generating projects. With the latest transaction, its total authorizations for these projects are $256.7 million. Ex-Im Bank is one of the largest financiers of renewable energy projects in India.
The demand for solar power in India is in part due to India’s national solar initiative, the Jawaharlal Nehru National Solar Mission. The initiatives objective is to bring 20,000 megawatts of installed solar capacity into the nationwide grid by 2020.
Ex-Im Bank’s support has come in the backdrop of a general lack of available long-term financing at commercially feasible terms for solar projects in India.