World Bank aid for solar projects a big boost to A.P.

The announcement by World Bank president Jim Yong Kim of over $1 billion for India’s solar energy initiatives has come as a major boost to the Andhra Pradesh power utilities.

The power utilities had planned to set up solar power projects in Anantapur, Kadapa and Kurnool districts with an aggregate capacity of 4,000 MW.

Land for the projects was identified in the three districts and the process for its alienation had already begun. A joint venture company of the State and Central Governments and the A.P. Solar Power Corporation Limited had already been floated as a special purpose vehicle for monitoring the progress of the projects.

The utilities, however, appear to be in no hurry to scout for assistance proposed by the World Bank as they would be anyway benefited, if not directly, from the announcement made by the Bank. “We have adopted a different model for the solar power projects and may not go for the Bank’s funding in the immediate future,” a senior official said.

According to officials, the utilities would allot land for the power projects along with basic infrastructure like connectivity and other facilities to the selected developers.

The developers would, in turn, be asked to pay an upfront amount calculated on the basis of the location and the land costs. “The value for the infrastructure in Kurnool, for instance, has been calculated at Rs.40 lakh per MW which the developer will have to pay as the upfront cost,” the official told The Hindu.
The developer, in turn, would factor in this amount and prepare the tariff proposals, the official said, adding that though a proposal was mooted initially to approach lending agencies, it was subsequently put off after the Central Government announced incentives for promotion of renewable energy projects.
Upfront charges
The upfront charges would be in addition to Rs. 20 lakh per MW grant provided by the Central Government for promoting solar energy projects.
Given the grant announced by the Centre, the State would stand to secure at least Rs.800 crore from the Centre for the 4,000 MW installed capacity planned.
Senior officials said the State would anyway stand to benefit from the announcement as the money would be routed through the Central agencies, the Power Finance Corporation and the Rural Electrification Corporation. “We can approach these agencies as and when required,” the official said.

Source : The Hindu, 16/07/16