USAID and ADB sign $848m MOU for Indian solar PV development

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The Asian Development Bank (ASD) has signed a memorandum of understanding (MoU) with the U.S. Agency for International Development (USAID) to help fund India’s growing solar PV market.

The MoU sets out the terms of an $848 million investment between the two development bodies, with ASD putting forward $500 million and USAID stumping up $348 million.

According to the U.S. Embassy in India, the agreement will "align the technical resources of two USAID programs to support ADB’s investments in the development of solar parks and renewable energy transmission infrastructure in states at the forefront of India’s efforts to promote clean energy."

The states of Gujarat and Rajasthan have been earmarked as the chief recipient of the funding as India works steadily towards its goal of installing 100 GW of solar PV capacity by 2022. A recent target set by the Ministry of New and Renewable Energy (MNRE) in India reveals a plan to build 25 large-scale solar farms in the country by 2020, bringing 20 GW of solar PV capacity online by that date.

USAID, through its partnership to Advance Clean Energy Deployment (PACE-D) Program, will work with ADB to assist the MNRE in this goal. The MoU outlines how public private partnership investment models can be created to ensure the money is most wisely invested, with ADB confirming that a large part of its $500 million in financing will go towards supporting India’s rooftop solar sector.

"ADB welcomes this collaboration with USAID that brings together our respective strengths, expertise and resources to the common objective of supporting India’s targets for clean energy expansion," said ADB India country director M. Teresa Kho.

"USAID and ADB have a shared interest in helping the government of India achieve its clean energy targets," added USAID India mission director Jonathan Addleton. "By aligning our technical expertise and financial resources, we can have an out-sized impact on clean energy development."

India’s bold solar plans were tested last month when the World Trade Organization (WTO) ruled in favor of a U.S. case against India’s domestic content requirement (DCR) – a ruling that prompted Indian energy minister Piyush Goyal to explore options for filing a case with the WTO against the U.S., challenging similar protection laws in place there to protect domestic manufacturing.

Such actions may, some experts suggest, prove useful in the two nations negotiating a settlement of this case, but others believe that the WTO ruling will only deliver minor damage to India’s wider solar ambitions. The country is on course to add between 3.5 to 4.5 GW of new solar PV capacity in 2016, propelling it to fourth-place globally in terms of newly installed solar capacity.