SoftBank's plan to build solar parks with IL&FS Energy runs into trouble

Japanese major SoftBank’s plan to build solar parks in a tie-up with IL&FS Energy has run into trouble. The bank’s energy arm in India, SB Energy, had signed a memorandum of understanding with IL&FS Energy in February this year. Industry sources said the partnership has fallen through and no joint venture is in sight.

The partnership has aimed to build solar power parks across the country, with total capacity of 20 Gw. 

SB Energy is looking at new partners to execute upcoming solar power projects, with capacity of 1 Gw. Sources said the company is facing challenges in getting land, clearances, and transmission facility. It is seeking an Indian partner.

To a detailed questionnaire sent by Business Standard, a SoftBank spokesperson said: “We don’t comment on what is essentially speculation.”

In 2015, SoftBank joined hands with Bharti Enterprises and Foxconn for an estimated investment plan of $20 billion in the clean energy sector. Its initial plan to set up solar panel manufacturing units in India has not seen any progress yet. 

SoftBank aims to invest $1 trillion by 2030 in the renewable energy sector in India.

The current installed capacity of solar power in India is 25 Gw; the tariff has come down to Rs 2.44 per unit. 

SB Energy has won 1.4 Gw of solar projects in India in the past two years. In the Bhadla solar park bidding, SB Energy had last year bid Rs 2.48 per unit, creating a record low. The project is currently facing issues over power transmission because of infrastructure problems.

Business Standard recently reported that the Centre has modified several norms for awarding the solar projects, which the industry feels “seem to be tailor-made” for the Japanese giant. 
 

These include a proposal to issue bulk tender for solar power projects of 10-15 Gw in one go. The move came after a meeting of Masayoshi Son, chief executive officer, SoftBank, with the Prime Minister’s Office in May. 

Son had asked the Indian government to consider bulk tender of close to 900 Gw of solar projects in one go and also promote dollar-based tariff. MNRE officials confirmed that the company had put in informal request to the ministry; however nothing has been made official.

The Centre also amended the solar bidding guidelines to ease the time required for land acquisition and financial closure. The Ministry of New and Renewable Energy is also considering leasing land for mega size plants.

However, the company continues to face challenges. 

Union Power and Renewable Energy Minister R K Singh recently in a letter said SB Energy resorted to “cartelisation” in a recent bidding of solar power projects, where it quoted Rs 2.77 per unit against the winning bid of Rs 2.44 per unit. 

“Our suspicion is SB Energy tried to form a cartel to push up the price. While in previous bids, the difference between the rates quoted between L-1 and the last bidder used to be not more than 10 paise per unit, in the present case, the difference came to 27 paise per unit (Rs 2.71-Rs 2.44),” Singh wrote in his August 30 letter.


Facing hurdles
 

• 20 Gw: Solar parks SB Energy and IL&FS were to set up under the agreement
• 1,400 Mw: Capacity of under-construction and operational solar power plants of SB Energy in India
• Japanese firm is now scouting for new partners to build solar parks
• Initial plan to set up a solar panel manufacturing unit in limbo
• Govt recently accused SB Energy of cartelisation in a bidding