Azure Power 2018: A loan to develop solar rooftop projects in India

Azure Power India Private Ltd (“AZI”), which was set up in 2008, develops, builds and operates solar projects in India. The company is a pioneer on its market and built India’s first solar power plant in 2009 and the first solar rooftop with a capacity of over 1 MW in 2013. Ten years after it was set up, the company is still in the expansion and innovation phase, which allows it to capture new markets, such as the rooftop segment.

PROPARCO has supported the group’s strong growth via two equity investments totaling USD 17.8m (3.5% of the capital), with USD 9.3m in 2013 and USD 8.5m in 2015, prior to the company being listed on the NYSE.

These longstanding relations prompted the CEO, Inderpreet Wadhwa, to call on PROPARCO again in the context of a USD 135m facility dedicated to the development of solar rooftops.

Thanks to the creation of a dedicated entity, Azure Power Rooftop (Genco) Private Limited and its 7 subsidiary SPVs, Azure aims to develop between 150 and 200 MW of solar rooftops over the next five years. This objective is underpinned by the country’s strong photovoltaic potential and the Government’s aim of achieving a national rooftop installed capacity of 40 GW by 2022 (against 2 GW today). 

The financing is split into two facilities: a USD 30m “A” facility for projects with a capacity of less than 10 MW (mainly with private counterparties) and a USD 105m “B” facility for projects with a capacity of over 10 MW (mainly with public counterparties). 

The transaction is being arranged by IFC, which is also a 30% shareholder of the group and is providing USD 45m. PROPARCO, a 3.5% shareholder, is providing USD 40m, with additional contributions of USD 30m from FMO and USD 20m from OeEB, respectively.

This rooftop activity is allowing the public authorities to avoid heavy investments to upgrade the transmission and distribution grids and will mean that consumers will pay less for their electricity than on the grid.

In terms of the fight against climate change, the project is in line with the objectives of the NDC (Nationally Determined Contribution) and the policies to promote clean and efficient energies in India. It will have positive impacts as it will reduce CO2 emissions by some 282,000 tons a year.

From an economic perspective, PROPARCO’s operation will: 

• create and support 110 direct jobs and some 30,000 temporary jobs during the construction phases for the solar systems over the next 5 years;
• support local capacity building, as Azure Power Rooftop organizes training for its employees to ensure there is a high-quality operation and maintenance of the systems.