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What is it going to take to get the World Bank to change course on renewable energy? Here at the Center we’ve been trying to help get the bank to be more aggressive on renewables for nearly a year. But inertia is a powerful force, and despite shifts in thinking by individual bank staff, the institution itself is still moving very slowly. But what if a major client and a competitor joined forces on renewables?
It turns out that this is happening in India. According to the Business Standard, the state of Gujarat is reportedly making a big push into renewable energy over the next few years, with plans to add 7,000 MW of renewable energy generation capacity. The state government will buy power from renewable energy producers at fixed prices, (known as feed-in tariffs in utility parlance), thereby easing financing of these capital-intensive renewables projects. This has attracted memoranda of understanding for photovoltaic and solar thermal investments worth some $9.2 billion.
Among these is an agreement with AES Corporation, one of the largest American energy firms, which will reportedly invest $1.2 billion in a 1,000 MW solar project. Expected to be operational by 2010, this will be one of AES’ largest plants – of any type – and the largest solar installation in the world.
And then there’s the bank, which is stuck providing unneeded financing for the massive Tata Mundra Ultra Mega coal-fired plant – also in Gujarat – through the IFC, its profit-driven private sector arm. Given that there are nine other ultra mega plants coming online in India, the IFC’s argument that it’s helping India pilot the technology is a bit disingenuous.
If a major shareholder-owned company like AES sees enough potential in solar to drop $1.2 billion in one project, you have to wonder why the IFC isn’t doing the same. India is launching its next green revolution, and if the bank isn’t careful it’s going to miss out on a lot of green jobs.