International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, will provide $5 million or Rs 25 crore in debt-financing to Mahindra Solar One Pvt Ltd for a 5 MW solar power project in Rajasthan. The project will ensure further access to clean energy in rural areas and address climate change.
Mahindra Solar One is a joint venture between the Mahindra Group and Kiran Energy, a Mumbai-based solar power company founded by Ardeshir Contractor (former head of KPMG’s investment banking business in India) and Alan Rosling (a former executive director of Tata Sons). Other promoters include IIT Mumbai faculty members Dr Sunit Tyagi and Dr Hemanshu Bhatt who have expertise in the solar sector.
Kiran Energy is backed by private equity players New Silk Route, Bessemer Venture Partners and Argonaut Private Equity.
The Rajasthan project was planned as part of the Jawaharlal Nehru National Solar Mission, a government initiative to expand solar production in India by 1,100 MW over the next two years.
The new solar photovoltaic power plant will generate enough electricity to serve nearly 60,000 rural homes and is expected to avoid some 8,000 tonnes of greenhouse gas emission, according to the company statement.
“IFC’s strategy in the solar sector is to increase energy access in emerging markets by investing in technology, scaling new business models and reducing costs – so that more people use solar power,” Anita George, IFC Director for Infrastructure in Asia commented on the investment.
IFC had disclosed in August last year that it could invest up to $6 million in debt and $5 million in equity in Mahindra Solar One (More on that here). Although solar energy is fast becoming a ‘sunrise’ sector in India and has attracted considerable interest from investors, as well as cross-border partnerships, the industry is seeing a consolidation globally.
Early in 2011, in one of the most high profile developments, US-based Solyndra filed for bankruptcy protection while in December 2011, Germany’s Solon went bankrupt. In October last year, Overseas Private Investment Corporation (OPIC), the US government’s development finance institution that pools together private sector funds, lent $150 million or around Rs 750 crore for a project to expand the use of solar energy to power telecommunication towers in India.
Last June, IFC invested $4 million in Sapphire Industrial Infrastructures Pvt Ltd, a subsidiary of Moser Baer Clean Energy Ltd. Sapphire is constructing a 5 MW solar plant at Sivaganga in Tamil Nadu. IFC has also put money in three other solar power-related firms in India in the past two years. Two of these companies are NDPL Solar and Azure Power. Moser Baer Photovoltaic Ltd is one of the Indian firms which has attracted a lot of private equity interest and absorbed investments worth over $200 million till date.