The World Bank’s Board of Executive Directors has approved a $200 million loan to the Government of Himachal Pradesh, India, to facilitate power sector reforms and increase the share of renewable energy (RE) in the state’s electricity generation.

This will contribute to the state’s overall aim of adding 10 GW of additional RE capacity to make the power supply greener. Himachal Pradesh aims to become a “Green State” by meeting 100% of its energy needs through renewable and green energy by 2030. The state currently meets more than 80% of its energy demands from hydropower. The World Bank’s Himachal Pradesh Power Sector Development Program will help the state enhance the use of its existing RE resources, including hydropower, and help to diversify its RE resources further, including adding 150 MW of solar capacity.

“The program will boost local economic activity while replacing fossil-fuel based energy consumption with green energy,” said Auguste Tano Kouamé, World Bank’s Country Director for India. “Moreover, the program will support HP to set up a single energy trading desk, thus enabling the sale of surplus hydropower to other states.”

More importantly, the program will provide a template for the Indian power market for underwriting new investments in renewable energy.

In Himachal’s hilly terrain, where challenges in maintaining uninterrupted power supply are higher and restoration in case of a breakdown may take longer than elsewhere, the program will help achieve a strengthened transmission and distribution grid, according to the World Bank. It will introduce advanced technologies such as a demand response management system and seamless access to RE. This is critical during peak load periods when the state must otherwise rely on expensive fossil-fuel-based power. The introduction of automated systems will be an important step toward providing clean, reliable 24/7 power supply, reduce power outages and minimize consumer complaints.

The program will help strengthen environmental, social, financial management, corporate governance and procurement capabilities of the state’s power sector utilities and agencies. In addition, it will contribute toward creating job opportunities in specialized technical and managerial fields in the sector, especially for women. Himachal Pradesh power utilities will train around 700 female apprentices throughout the lifespan of the program. This will build on the National Apprentice Promotion Scheme implemented by the Ministry of Skill Development and Entrepreneurship.

The $200 million loan from the International Bank for Reconstruction and Development (IBRD) has a final maturity of 14.5 years, including a grace period of 4.5 years.

A report released in March 2023 by India’s Central Electricity Authority said Himachal Pradesh State had hydropower generation potential of 18,470 MW. One hydropower project being developed in the state is 500 MW Dugar in Chamba District.