ADB to provide loan for construction of Garadagh solar power plant

Asian Development Bank (ADB) plans to provide a loan of $23.20 million for the development, construction and operation of a solar photovoltaic power plant with an installed capacity of 230 MW on a site located 9 km northwest of the Alat settlement in eastern Azerbaijan (the Alat Solar Project – Garadagh solar power plant), Report informs referring to the ADB.

The approval of the loan at the Board of Directors of the bank is expected on July 25.

The total cost of the project is $240 million. The European Bank for Reconstruction and Development (EBRD) plans to allocate $51 million to the project. The project is also expected to be financed by the International Finance Corporation (IFC is part of the World Bank Group).

The project will be developed by a newly established special purpose vehicle in Azerbaijan, which will act as the borrower for the project financings. Abu Dhabi Future Energy Company PJSC (Masdar) acts as the sponsor for the project. A limited liability company Masdar Azerbaijan Energy has been registered in Azerbaijan to implement the project.

The project consists of three components - the construction of a solar photovoltaic installation and a new substation; 330 kV overhead transmission line connecting the local substation with the national grid; road improvement to create a new access road along the existing track.

The project will add 230 MW of solar generation capacity to the Azerbaijani power system and power approximately 110,000 homes. This would help substitute natural gas-based power plants and help in meeting the renewable energy targets set by the Government of Azerbaijan in line with county's commitments under the Paris Agreement. The project will also result in strong environmental benefits with estimated annual CO2 emissions savings of up to 200,000 tons. This will assist the country in its low-carbon transition, reducing its current high reliance on thermal power generation.

The project is located 60 km south of Baku, near the mud volcanoes of Gobustan, as part of a bilateral agreement with the government of Azerbaijan and Masdar Azerbaijan Energy. The project area covers 550 hectares. The nearest urban areas are within Gobustan (5 km east - 60 km northeast) and Alat (8 km southeast). The area is predominantly desert and semi-desert. There are no residential buildings or other types of physical structures within the project area.

The Masdar Azerbaijan Energy Limited Liability Company is a limited liability company incorporated in Azerbaijan for the sole purpose of the project. Based in the UAE, Masdar is a regional leader and a major international player in renewable energy and sustainable urban development.