Sunborne Energy LLC, a solar power developer backed by billionaire Vinod Khosla, got a 1.4 billion-rupee ($30.6 million) loan to build a plant following India’s first auction of solar development permits.
State Bank of Patiala, Canara Bank Ltd., Export-Import Bank of India and State Bank of Travancore agreed to the 12-year loan for a 15-megawatt plant in Gujarat state, Sunborne Chief Financial Officer Anil Nayar said today in a telephone interview. Sunborne has a nine-month grace period on payments.
India plans to build solar capacity equivalent to one nuclear plant by January, requiring about $3.2 billion in investment. Funding has been a hurdle for project developers, including billionaire Anil Ambani’s Reliance Power Ltd. and Lanco Infratech Ltd., because some banks won’t lend to an industry that’s new to India.
“It took a long time, but they came through,” Nayar said, declining to disclose the interest rate on the loan, saying it was in line with local market rates for project financing. Such deals may make banks more comfortable lending to solar projects in India and allow the industry to expand, he said.
Banks have said power generation may fall short of targets because there’s little historical data on solar-radiation patterns in the country and equipment may not perform as expected under India’s climatic conditions.
As part of the Sunborne financing agreement, the lenders demanded a guarantee fund that could be tapped should power output fall “significantly” in the first two years, Nayar said. “We’ve been conservative in our own estimates so it shouldn’t be a factor.”
Sunborne, whose investors include U.S. venture capital firm General Catalyst Partners, International Finance Corp. and Khosla Ventures, expects to complete the plant as early as November. China’s Suntech Power Holdings Co., the world’s largest producer of silicon solar panels, has begun delivery of the equipment and construction has started, Nayar said.