First Solar has welcomed a new US$1 billion loan agreement between the US Export-Import Bank and the Indian Renewable Energy Development Agency (IREDA).

The arrangement was announced following Prime Minister Narendra Modi’s talks with US President Barack Obama.

The loans will be used to purchase US equipment for renewable energy projects, chiefly solar. Reports from India claim there is a condition that 30% of each project uses domestic content.

In a statement to PV Tech, Sujoy Ghosh, country head, First Solar, India said: “Cost of capital is the single biggest contributor in the overall cost of energy from a PV plant today. US ExIm has been supporting the Indian Solar sector since 2011, and its credit support typically has extended tenure and lower cost as compared to local Indian debt. We welcome this move by the US ExIm Bank to leverage the local resources of IREDA to further extend its support to the Indian solar sector and we truly believe this would be a win-win for the developers and the power consumers”.

A joint statement released by the two governments at the end of the two leaders’ first bi-lateral summit the agreement would make “up to US$1 billion in financing available to bolster India’s efforts to transition to a low-carbon and climate-resilient energy economy, while boosting US renewable energy exports to India”.

The ExIm bank provides financing to help US companies to access overseas markets, often shouldering the political or country risk that private sector invetsors may shy away from.