India's Azure Power Begins Work on Solar Power Project and Outlines Ambitious Plans for Next Three Years

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Researched by Industrial Info Resources (Sugar Land, Texas)--Independent solar energy developer Azure Power (New Delhi) has begun the process of setting up a 15-megawatt (MW) solar photovoltaic power project in the western state of Gujarat. According to Inderpreet S Wadhwa, the chief executive officer of Azure Power, generation of 1 MW of solar energy costs $3.7 million, and the proposed solar project would consequently require an investment of about $56 million. The project site is at Dahegam, which is near the capital city of Gandhinagar, and the company has identified 75 acres of land. The generated power is expected to be purchased by the state and at present, negotiations over a power purchase agreement (PPA) are under way. The project is scheduled to be commissioned in 2011.

On the financial front, two leading venture capital investors in the clean energy sector, Foundation Capital (Menlo Park, California) and Helion Advisors Private Limited (Bangalore, Karnataka), which is the Indian arm of Helion Ventures Partners, LLC (Port Louis, Mauritius), provided funds during Azure Power's Series A investment program in September 2008. Both the companies have agreed to provide funds during the company's Series B investment program as well. During this round, they will be joined by the International Finance Corporation (IFC) (Washington, D.C.), a member of the World Bank Group (Washington, D.C.).

IFC will be investing in a solar project for the first time under its new cleantech investment program. IFC's $10 million equity investment will assist in bringing solar power to hundreds of Indian villages. When completed, India's targeted solar power projects are expected to generate more than 20,000 MW per hour of clean energy.

Azure Power is the first private-sector company in India to develop a grid-connected, MW-scale solar photovoltaic power project. In December 2009, the company commissioned its first 2-MW solar power project at Awan, in the Amritsar district of Punjab. The project provides power to 32 villages in the state. The company has a 30-year PPA with the state government of Punjab. The company plans to increase Gujarat's installed solar power capacity to between 50 MW and 60 MW within the next three years. In fact, Azure Power's plans include implementation of several MW-scale plants across the nation within a 12-month period. Agreements have been signed with the state governments of Haryana and Karnataka, while talks are on with the governments of Maharashtra, Rajasthan and West Bengal. Azure Power hopes to install at least 100 MW of solar-power capacity across the country within the next three years, with an investment of about $331 million.

In December 2009, Azure Power expressed its interest in setting up a 2-MW solar power project at Purulia in West Bengal. The company hopes to ramp up the capacity of the installed solar power capacity in the state to 50 MW within five years of commissioning the first plant.

In February 2010, Azure Power announced plans to invest close to $50 million to set up two solar power plants in Karnataka. The state has signed a PPA for the 2-MW project in Kolar. The second project, with a generation capacity of 10 MW, will be set up at Bagalkot, in north Karnataka. The 10 acres of land for the Kolar project has been acquired, while the 50 acres of land for the Bagalkot project has been identified. Both projects are scheduled to be operational from March 2011. According to Wadhwa, the technology for the projects would be imported from the United States, while the solar modules would be procured from local companies such as HHV Solar Technologies Pvt Limited (Bangalore, Karnataka) and Tata BP Solar India Limited (Bangalore), among others. To attract more investment in the solar power sector, the state government of Karnataka has offered solar power projects a 10-year tax holiday.

The timing of the funds received by Azure Power is significant, since it comes at a time when India has announced plans to implement its 20,000-MW Jawaharlal Nehru National Solar Mission by 2020. The program is being supported by IFC and the International Bank for Reconstruction and Development (IBRD) (Washington, D.C.), another member of the World Bank Group. Solar energy is available in abundance during the times of peak power loads in India, and if tapped sufficiently, it can go a long way in helping India overcome its energy deficit of 11%.

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