ADB will invest $40 million to take a 25% stake in the company, along with India's NTPC Ltd (50%) and Japan's Kyushu Electric Power Company (25%). The bank aims to invest $2 billion a year in renewable-energy and energy-efficiency projects in Asia and the Pacific.

“The new joint venture company will help India achieve its goal of reducing the country's dependence on fossil fuels, will cut greenhouse gas emissions and improve its energy security,” said Michael Barrow, Director in ADB’s Private Sector Operations Department (PSOD).

“We hope this company will also provide an example to other foreign investors looking at India’s renewable energy sector.”

India’s electricity supply fails to meet demand, triggering regular blackouts, and is largely generated from increasingly uncertain domestic sources of coal or ever-more-expensive imported coal.

A National Action Plan on Climate Change targets 15% of India’s power coming from renewable sources by 2020 – a rise from a current figure of 10%. About 65% comes from mostly coal-fired thermal power plants. Hydropower and nuclear power make up the remaining 25% of generation.

“India now has the capacity to generate just over 11,000 megawatts of wind power but, with the right investment, that could increase to almost 48,000 megawatts,” said Don Purka, Senior Investment Specialist with ADB’s PSOD.

“At the same time, small hydropower has the potential to generate about 15,000 megawatts of power and, what’s more, is often the best way of providing electricity to low-income households in remote areas.”

NTPC is India’s largest power generating company, with a 33% market share. While majority-owned by the government, it operates on a commercial basis as an independent company. NTPC aims to raise its current generating capacity of 32,694 MW to 75,000 MW by 2017.

Kyushu Electric Power is an integrated private sector generation, transmission and distribution company. The company owns and operates about 20,024 megawatts of power generation capacity including hydroelectric, wind, solar and geothermal projects on Japan’s southwestern Kyushu Island.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2009, it approved a total of $16.1 billion in financing operations through loans, grants, guarantees, a trade finance facilitation programme, equity investments, and technical assistance projects. ADB also mobilised cofinancing amounting to $3.2 billion.