The Asian Development Bank (ADB) and Reliance Power are hoping to kick-start large-scale private sector solar power development in India by building a 40 MW facility in Rajastan state.

The ADB is providing a long term loan of up to $48 million to finance the Dahanu project, which will be the largest photovoltaic (PV) plant in the country.

It also marks Reliance’s first foray into the solar energy sector. Reliance Infrastructure Limited, a private distribution company, will buy the electricity from the plant and distribute it to households in Mumbai.

“India’s solar energy potential is one of the highest in the world and this plant will help kickstart large-scale, private-sector solar electricity generation in the country,” said Michael Barrow, Director in ADB’s Private Sector Operations Department.

The deal will enable Reliance Infrastructure to fulfil its renewable purchase obligations set by India’s regulators. The Export-Import Bank of the USA is also providing funding for the $147 million project.

The project is scheduled for completion in 2012.