World Bank provides $200 million loan to Himachal for power industry reforms, renewable energy

By Consultants Review Team Thursday, 29 June 2023

TheThe World Bank’s Board of Executive Directors granted a loan of $200 million to the Government of Himachal Pradesh to facilitate reforms to the power sector in the state and improve the share of green energy (RE) in the state’s electricity generation. This will contribute to the state’s overall aim of adding 10,000 megawatts (10 gigawatts) of additional RE capacity to make the state’s power supply greener.

Himachal Pradesh (HP) aims to become a ‘Green State’ by meeting 100 percent of its energy needs through renewable and green energy by 2030. HP currently meets more than 80 percent of its energy demands from hydropower. The World Bank’s Himachal Pradesh Power Sector Development Programme will help the state enhance the utilisation of its existing RE resources, including hydropower, and help to diversify its RE resources further. For instance, it will add 150 megawatts of solar capacity in the state, reducing greenhouse gas emissions by more than 190,000 metric tons per year.

“The program will boost local economic activity while replacing fossil-fuel-based energy consumption with green energy,” said Auguste Tano Kouamé, the World Bank’s Country Director for India. “Moreover, the Program will support HP to set up a single energy trading desk, thus enabling the sale of surplus hydropower to other states.” More importantly, the Program will provide a template for the Indian power market for underwriting new investments in renewable energy.

In Himachal’s hilly terrain where challenges in maintaining an uninterrupted power supply are higher – and restoration in case of a breakdown may take longer than elsewhere – the Program will help achieve a strengthened transmission and distribution grid. It will introduce advanced technologies such as a demand response management system and seamless access to RE. This is critical during peak load periods when the state must otherwise rely on expensive fossil-fuel-based power. The introduction of automated systems will be an important step towards providing clean, reliable 24x7 power supply to citizens, reducing power outages, and minimizing consumer complaints. The Program will help strengthen the environmental, social, financial management, corporate governance, and procurement capabilities of the state’s power sector utilities and agencies. In addition, it will contribute towards creating job opportunities in specialized technical and managerial fields in the sector, especially for women.

HP power utilities will train around 700 female apprentices throughout the lifespan of the program, giving them hands-on exposure and training in technical roles within the power sector. This will build on the National Apprentice Promotion Scheme implemented by the Ministry of Skill Development and Entrepreneurship. “The Program will promote good and sustainable practices within the power utilities in the state to transition them to run a green and low carbon electricity system,” said Surbhi Goyal and Pyush Dogra, team leaders for the Program. “This shall contribute towards the state’s goal to be one of the first ‘Green State’ in the country.” The $200 million loan from the International Bank for Reconstruction and Development (IBRD) has a final maturity of 14.5 years including a grace period of 4.5 years.

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