INFRASTRUCTURE CONSULTING

Individual Assignment

Name: Sahil Sharma

Roll No.: A049

Why World Bank is interested in funding roof top solar in North East? What else are they
funding in India in Infrastructure and what drives their investment strategy?
The world must turn to (the) sun to power our future, Indias Prime Minister Narendra Modi
said at the historic COP21 climate conference in Paris.

With 1.3 billion people, India is the worlds third largest consumer of electricity. Over 450
million ceiling fans are in use and 40 million sold each year, but 240 million people still have no
legal electricity connection. Demand for electricity is growing at the same rate as in France or
Germany as millions of people in rural or impoverished areas seek access to power in their
homes and workplaces.
India has pledged to derive 40% of its energy needs from renewable sources of energy by 2030.
This includes plan for the development of 100GW of solar energy by 2022. This target which
comes under the National Solar Mission of Government of India, seems to be an ambitious one
given that the worlds total installed solar power capacity in 2014 was 181 GW. India will need a
huge sum of money to achieve this target and none other than the World Bank group has come
forward to help India in doing so.

National Solar Mission

The National Solar Mission is a major initiative of the Government of India and State
Governments to promote ecologically sustainable growth while addressing Indias energy
security challenge. The target solar power capacity to be achieved by 2022 under this initiative
was revised by Union Cabinet chaired by Mr. Narendra Modi to 100 GW from earlier 40 GW.
With this ambitious target, India will become one of the largest Green Energy producers in the
world, surpassing several developed countries. The total investment in setting up 100 GW will be
around Rs. 6,00,000 cr. In the first phase, the Government of India is providing Rs. 15,050 crore
as capital subsidy to promote solar capacity addition in the country. This capital subsidy will be
provided for Rooftop Solar projects in various cities and towns, for Viability Gap Funding
(VGF) based projects to be developed through the Solar Energy Corporation of India (SECI) and
for decentralized generation through small solar projects.

North Eastern states leading the solar revolution

North Eastern States have vast solar potential with average solar insulation in the range of 5
kWh/m2 for more than 300 sunshine days. The state governments have identified land for
planned Solar Parks with a capacity of 500 MW in West Bengal and 250 MW in the North
Eastern States. There is a massive thrust to expedite projects in the North East to overcome
power shortages and increase prosperity. Investment of 980 million has been earmarked for
upgrading power systems in eight North Eastern States Arunachal Pradesh, Assam, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim and Tripura. The state governments of the region intend
to make use of this positive environment in the solar market. In line with the central government
of Indias intention for substantially harnessing the solar potential in the region, the respective
state governments are expected to meet their obligations and provide competitive, reliable power
supply to their consumers and ensure a sustainable energy mix in the long run.

North eastern states in India are an attractive destination for setting up solar projects. There is a
wide array of interesting solar projects emerging from the Northeast. Last year, the Meghalaya
government sanctioned Rs 25 crore ($4 million) for the installation of solar lights under the
Green City Project (GCP).

Nagaland set up innovative solar powered water treatment units in three villages of the state
capital in June 2013. The water treatment units now provide drinking water to 2,639 people the
most water scare villages of Kohima district, funded by the Union Ministry of Drinking Water
and Sanitation.

The Manipur Renewable Energy Development Agency has launched a solar thermal scheme,
which aims to provide at least 10,000 solar heaters to the nine districts of the state over the next
five years, under the National Solar Energy Mission. Manipur suffers from acute power
shortages, with the state power department supplying 80MW against a demand of 170MW. The
solar heaters, with a capacity of 100 litres per day, will cost around Rs 25,000 each and 75% of
costs are subsidised by the state and central government. Manipur was the first state to install
solar heaters on such a large scale.

World Bank Financing

The World Bank Group will develop a road map to mobilize financing for development and
deployment of affordable solar energy, and work with other multilateral development banks and
financial institutions to develop financing instruments in this regard. The World Bank Group also
signed an agreement with the International Solar Alliance (ISA), consisting of 121 countries, led
by India. It has committed to provide $1 billion support to Indian solar energy projects. The
World Bank-supported projects include solar rooftop technology, infrastructure for solar parks,
bringing innovative solar and hybrid technologies to market and transmission lines for solar-rich
states. The cumulative investment in solar would be the World Banks largest financing in this
sector for any country. The World Bank also signed an agreement to give close to $625 million
for the Grid Connected Rooftop Solar Programme under the National Solar Mission. The project
will finance the installation of around 400 megawatt of solar photovoltaic power projects.

Why World Bank is investing in India

i) The outcome of the Paris climate Agreement was to contain the global warming to under a 2
degree Celsius increase. To achieve this target, it is imperative to provide assistance to countries
like India, which is the third largest emitter of carbon dioxide, to become a global leader on
renewable energy.

ii) In India, solar power is starting to displace coal as an energy source. The cost of electricity
from solar photovoltaic (PV) is currently a quarter of what it was in 2009 and is set to fall
another 66% by 2040. That means, a dollar will buy 2.3 times as much solar energy in 2040 than
it does today. With nearly 300 days of sunshine every year, India has among the best conditions
in the world to capture and use solar energy. Clearly, the market agrees, as is evident from the
significant drop in the cost of solar power. In its latest solar auction, the country achieved a
record low tariff of INR 2.44/unit (4 cents/unit) for a project in the desert state of Rajasthan.

iii) India reckons its renewable energy industry could generate business opportunities worth $160
billion this decade, thus making it a lucrative market.
Other Infrastructure project funded by World Bank

i) The Government of India and The World Bank have signed a US$ 650 million loan agreement
for the Eastern Dedicated Freight Corridor-III (EDFC-III) project.

ii) The World Bank has agreed to invest more than one billion dollars (more than Rs7,000 crore)
in the Mumbai Urban Transport Project (MUTP) III and the Climate Resilient Agriculture
Project formulated for the drought-affected districts of Vidarbha and Marathwada.

iii) The World Bank-funded $150 million (around Rs 1,000 crore) infrastructure development
project of the Inland Water Transport (IWT) Directorate for the Brahmaputra river has started
and it is expected that this phase of the project could be completed by 2022. The World Bank
sanctioned the project in the 2017-18 financial year.

World Bank Investing Strategy in Infrastructure

Infrastructure is viewed as the agent of change to address the more systemic development
challenges of todays world, from social stability to rapid urbanization, climate change, natural
disasters, and food and energy security. Finding solutions to these challenges requires tackling
the complexity and inter-connectivity of sectors. This realizationthat infrastructure is more
than the sum of actions by individual sectorsis shaping the global agenda, from the G-20
Summits in Korea and Cannes to the upcoming summit in Mexico and the Rio+20 sustainable
development conference.

In response to this evolving context, the World Bank Group has developed an
updated infrastructure strategy. Transformation through Infrastructure specifies what the Bank
Group will do over the next three years in all the infrastructure sectorsenergy, information and
communication technologies, transport, and water.

The new strategy rests on three pillars:

Core Engagement: The bulk of the Bank Groups engagement will continue to be mono-
sector interventions in support of the access to basic infrastructure services and the
growth agenda. But enhanced effectiveness is needed in the areas of poverty, governance,
and gender.

Transformational Engagement: The Bank Group will scale up its engagement in

tackling the more systemic development challenges. This will require reaching out
beyond the line ministries and traditional partners; repositioning the Bank Group in
global forums to lead the infrastructure debate; and facilitating knowledge transfer
between clients instead of merely generating it. It will also require new types of
projectssmall and large transformational projects that seek to optimize spatial, green,
inclusive and co-benefits.
 Mobilization of Private Capital: The Bank Group will need to start thinking beyond its
own capital into mobilizing others, including the private sector, in finding solutions to
ever-growing complex needs.

The strategys vision is anchored in country realities, with six World Bank Group regional action
plans outlining how the strategy will be implemented.

In Sub-Saharan Africa, for instance, the strategy will involve more emphasis on regional projects
that connect countries with power grids, broadband, transportation corridors, and large-scale
renewable energy. In East Asia, it will involve partnering with city mayors, the private sector,
civil society, regional organizations, and other donors to seek solutions to urban resilience and
optimize low-carbon growth.