NHPC wants to expand into solar power and is looking for $600 million from Japanese banks.

The largest hydropower business in India, NHPC Ltd., is in discussions with three of the top banks in Japan about financing its growth into solar energy. According to finance director Rajendra Prasad Goyal, NHPC is in talks with Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc., and the Japan Bank for International Cooperation about borrowing up to 50 billion rupees ($609 million) in yen-denominated loans.

The corporation anticipates that debt in yen will be less expensive than domestic loans. This is crucial for India’s fiercely competitive solar sector, where NHPC is expanding its green energy portfolio by developing 1.2 gigawatts of solar projects.

Solar and wind projects are granted in fiercely contested auctions, with players undercutting opponents’ bids displayed live on an electronic screen. This is in contrast to hydropower projects, which are created using a cost-plus approach due to the inherent difficulties in construction. As of March, the corporation owes a total of 253 billion rupees in long-term debt, with more than 90% of the debt coming from local sources. According to Goyal, it intends to start up its solar projects by the end of 2025.

For the first time in four years, NHPC is considering borrowing from abroad. According to Goyal, the corporation is looking for at least a 10-year duration to accommodate its cashflows. The company’s main operation, creating power from water, will continue even as solar is added. According to the company’s website, 9.3 gigawatts of capacity are being built in addition to the nearly 7 gigawatts of hydropower facilities that are now in operation.

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