India’s State Government of Madhya Pradesh signed project agreements with solar power companies today making Rewa Ultra Mega Solar Park a reality and helping India get closer to its 100 GW solar energy goal by 2022. IFC, a member of the World Bank Group, is the lead transaction advisor for this project that will mobilize $550M in private investment and avoid a million tons of GHG emissions.
The project is led by Rewa Ultra Mega Solar Limited (RUMSL), a joint venture between the Solar Energy Corporation of India (SECI) and Madhya Pradesh Urja Vikas Nigam Limited (MPUVN). The initiative utilized a robust project structure and innovative de-risking mechanisms, paving the way for other large scale solar power projects in India.
With a record low tariff of US Cents 4.4/kilowatt hour offered through a competitive bidding process, the project achieved the lowest tariffs ever awarded for a solar project in India, bringing solar tariffs in the country on par with fossil fuels for the first time.
“The Rewa solar park transaction will have an enormous ripple effect, helping create new markets for large solar projects across India and the region,” said Philippe Le Houérou, IFC Executive Vice President and CEO. “We have partnered with state and national government agencies for years to develop the solar market in India – from rooftops to mega solar parks – and the agreements signed today are the next step in IFC’s efforts to help India be a global leader in renewable energy and secure a clean, sustainable future.”
As transaction advisor appointed by the government of Madhya Pradesh, IFC played a strategic role in advising RUMSL in designing the structure, balancing public and market risks, and creating a competitive auction process. IFC also assisted in developing a unique power scheduling arrangement that enabled the Delhi Metro Rail Corporation to take energy straight from the solar park to power its rail service.
“With the Ministry of New & Renewable Energy asking other states to incorporate many key provisions of this transaction into their solar projects, we are very proud that Madhya Pradesh is leading the way in large-scale renewable power developments in India,” said Manu Srivastava, Chairman, Rewa Ultra Mega Solar Limited and Principal Secretary, New and Renewable Energy Department of Government of Madhya Pradesh. “This is the first time that solar power has achieved grid parity in our country, which means that the ambitious renewable energy targets set by the Government of India are within reach. This is truly revolutionary. IFC played a critical role in this record setting project."
The 750 MW capacity project was auctioned in three packages of 250 MW each, and will be one of the biggest single site solar projects in the world. The three winning bidders for the project are Mahindra Renewables, ACME Solar, and Solenergie Power.
The winning bidders signed two sets of power purchase agreements with the Madhya Pradesh Power Management Corporation Ltd (MPPMCL) and the Delhi Metro Rail Corporation. With about 24% percent of energy from the park being sold to the Delhi Metro, it will meet about 80% of daytime energy requirement of Delhi Metro.
The Rewa solar project will also receive financing from the World Bank, which is helping India deliver on its solar ambitions with more than $1B in lending over FY2017, as well as supporting the India-led International Solar Alliance, which aims to promote solar use globally by mobilizing $1T in investments by 2030
India is IFC's top country exposure, globally. IFC's committed portfolio in India is over $5B as of June 30, 2016. In FY16, IFC committed $1.1B in new investments in the country. In addition to strengthening local capital markets in India, IFC is focused on boosting financing in infrastructure and logistics, promoting financial inclusion, helping create conditions to attract increased private capital, and helping structure public-private partnerships.