Reliance Power to Buy First Solar Panels for U.S.-Backed Project

Indian billionaire Anil Ambani- controlled Reliance Power Ltd. (RPWR) will buy solar panels from First Solar Inc. (FSLR), the world’s second-biggest maker of the equipment by sales, for a 100-megawatt project backed by U.S. funding.

The U.S. Export-Import Bank approved an $84.3 million direct loan on Aug. 25 to Reliance Power’s Dahanu Solar Power Pvt. unit to purchase First Solar panels for the first 40 megawatts of the project, the Washington-based agency said in an e-mail to Bloomberg News in response to questions.

Reliance Power plans to eventually expand the project in Jaisalmer in Rajasthan state to 100 megawatts using thin-film photovoltaic panels, according to a document submitted by the Dahanu unit to the United Nations seeking to obtain carbon credits for the solar farm. Reliance Power confirmed the Ex-Im loan in an e-mail, declining to provide further details.

The thin-film technology selected by Reliance Power is cheaper than traditional silicon-based panels and is also exempt from Indian restrictions on solar imports. Thin-film accounted for 12 percent of global solar-panel production in 2010 and is backed by manufacturers including General Electric Co. (GE), Sharp Corp., and First Solar, the world’s biggest, according to data compiled by Bloomberg.

Ex-Im Bank said the interest rate for Reliance Power’s 16.5-year loan will be fixed at the time of the first disbursement. The agency calculates its commercial interest reference rates monthly based on the U.S. Treasury bond rate.

As of Aug. 15, the cost of borrowing for a renewable energy project was 3.96 percent, according to Ex-Im’s website. In India, where the central bank has boosted borrowing costs 11 times since March 2010, the funding cost of capital for clean- energy plants is estimated at 13.3 percent by the central electricity regulator that sets rates paid for power.

The Dahanu unit has signed a 25-year contract to sell power from the first 40 megawatts to Reliance Infrastructure Ltd. (RELI), another group company, at a rate of 14.95 rupees (33 cents) per kilowatt-hour, according to the UN submission. The plant will be located in Lawan Village in Jaisalmer district, it said.

The Mumbai-based company has also won a license to build a separate 100-megawatt solar-thermal plant in Bikaner, Rajasthan.

To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.