The Asian Development Bank or ADB recently approved a $250 million policy-based loan to strengthen India’s power sector.
“ADB has been working with the Government of India to help ramp up its transition to clean and renewable energy and facilitate policy actions to ensure a sustainable, inclusive, and climate-friendly power supply,” said Len George, Principal Energy Specialist, ADB. “This policy-based loan will help reduce barriers to scale up commercial financing for clean energy and contribute to India’s fulfillment of its climate change mitigation commitments.”
How will the loan help:
The loan will enable the country to improve financial sustainability and facilitate the shift to renewable energy. It will:
• Enable measures to improve the financial performance, corporate governance, and service quality of electricity distribution companies (DISCOMs)
• Create a conducive environment for private-sector investment
• Aid in the implementation of an incentive-based results-oriented approach to improving DISCOM performance on parameters including losses, cost recovery, metering, and timely payment of dues to access government budget support
ADB and the power sector reform program:
The Power Sector Reform Program (Subprogram 1) is the first of a two-part program to strengthen power trade markets and ancillary services in India. It encourages renewable energy use in agriculture, accelerates solar deployment, and optimizes power plant dispatch. The policy-based loan will enable the country to achieve 50% non-fossil fuel capacity by 2030.
ADB is investing $1.5 million in capacity building and policy reforms in green hydrogen, a crucial sustainable energy source, in coordination with German development cooperation through KfW.