Japanese banks are set to provide financing of up to the equivalent of $496 million for a key grid transmission project in India under a new Asian framework on energy cooperation, Nikkei Asia reported on Thursday.
Japan’s Sumitomo Mitsui Banking Corp (SMBC), Kansai Mirai Bank, and the state-backed Japan Bank of International Cooperation (JBIC), are lining up for up to 80 billion yen, or $496 million in current exchange rates, in syndicated financing for a high-voltage direct current (HDVC) transmission project by India’s state-owned power transmission company, Power Grid Corporation of India.
India expects the project to become operational in 2029 as the country looks to boost its power transmission and distribution network to meet constantly growing electricity demand and rising share of renewable sources in the power mix.
The Japan-backed project is set to be the first under the new POWERR Asia (Partnership on Wide Energy and Resources Resilience Asia) initiative announced by Japanese Prime Minister Sanae Takaichi in April, at the peak of the Strait of Hormuz crisis, which sent Asian energy buyers scrambling for oil and gas.
Sharp rises in solar PV and wind investments have taken their share to over 50% of India’s installed power capacity. The increase in variable renewable electricity has necessitated power sector infrastructure upgrades to avoid curtailment.
“Grid upgrades remain another major priority, with rising investment in transmission and distribution aimed at connecting renewable-rich regions and reducing curtailment,” the International Energy Agency (IEA) said in its World Energy Investment 2026 report at the end of May.
India’s electricity grid is expanding at a slower pace than the boom in renewable energy installations, leading to increased share of clean energy curtailments and threatening to slow the solar and wind boom in the world’s most populous country, clean energy think tank Ember said in a May report.
Grid and transmission constraints accounted for nearly two-thirds of all renewable energy curtailment at 300 gigawatt-hours (GWh) in the first quarter of the year, according to Ember’s estimates.
By Tsvetana Paraskova for Oilprice.com