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Indian solar power market sees global fund flow

Global PE majors, cell makers, power utilities line up to be part of 100,000-Mw wave

Shreya Jai  |  New Delhi 

Solar plant

As Indian policy makers announce big-ticket projects and set huge targets for solar power capacity addition, global investors smell a huge opportunity.

US-based Morgan Stanley is likely to make a big investment in the solar space soon, likely in a +100-Mw project. So are other institutional investors such as IFC and Standard Chartered. Besides, Goldman Sachs, which invested about $375 million in Sumant Sinha-promoted ReNew Power, is looking to make more such investments in noted or upcoming companies in the clean energy space.

US Exim Bank, during Prime Minister Narendra Modi’s recent visit to the US, extended a funding of $1 billion for solar power programmes in India. “Similarly, ADB and German state-owned KfW are also on board for providing funding to the solar programmes to be announced by the government,” said a senior government official in the ministry of new and renewable energy (MNRE).

Solar power in India is about to see a massive scale-up of 100,000 Mw. MNRE has got the mandate from the prime minister to achieve this goal by 2019.

If the plan of adding 100,000 Mw of solar power hits the ground, India would need investment to the tune of around $110 billion, including transmission capacity, according to government calculations.

“All of this could not come from domestic investors alone. More than half of this amount, or even more, will come from outside India. The big-ticket announcements by the Indian government has made serious investors sit up and take notice,” said Vinay Rustogi, managing director, Bridge to India, a leading consultancy firm monitoring foreign investment in India’s renewable energy space. Of the $15-20 billion that the country will need annually, around $6 billion is likely to come from foreign investors.

On the manufacturing and power production side, at least 10 big Chinese solar companies are looking to set up joint ventures in India. Senior officials in the Madhya Pradesh government said talks with a Chinese solar cell manufacturer to set up a facility in the state were in the last stage.

From the US, First Solar and SunEdison already have a presence in the country; both participated in bidding for state and Central projects. The others in line are mostly European power utility companies — EDF, Fonoroche and Solairedirect from France and B Electric from Germany. Solairedirect group created history in the first phase of the Jawaharlal Nehru National Solar Mission by bidding the lowest tariff of Rs 7.9 a unit for a five-Mw project.

First Solar has an installed capacity of more than eight Gw across the globe. In the solar cell markets, First Solar currently controls around 20 per cent of the market; it is planning to increase this to 25 per cent.

“The Indian solar market is a big space to play around and we will not only look at solar cells market but utility-scale projects as well,” said Sujoy Ghosh, country head, First Solar India. The company recently won 40-Mw solar power plants in Andhra Pradesh at a bid of Rs 5.35 a unit, the lowest in current times.

New York Stock Exchange-listed SunEdison has 95 Mw of operational solar plants in the country. With its presence in tenders for almost all state and Central project, SunEdison is likely to emerge as one of the leading players.

Finland’s state-controlled Fortum India Pvt Ltd, which forayed in the Indian solar power market last year, is looking at both acquiring and bidding for projects. Fortum acquired a five-Mw solar power plant in Rajasthan last year, and also bid for 10-Mw in the Phase-II, second batch of the Jawaharlal Nehru National Solar Mission, in January this year. Senior executives of the company, which set up an office recently, said Fortum was gearing up to participate in the projects that the government was planning to offer.

  • Private equity companies looking at Indian market: Goldman Sachs, Morgan Stanley, IFC and Standard Chartered
  • Institutional funding: ADB, US Exim bank and German state owned KfW to fund programmes by the ministry of new and renewable energy
  • Foreign solar giants: First Solar (US), SunEdison (US), Fortum (Finland), Solairedirect, EDF and Fonoroche (France)
  • Chinese solar cell manufacturers identifying sites for setting up units in India
  • Madhya Pradesh likely to host the first Chinese solar cell manufacturing facility

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First Published: Fri, December 05 2014. 00:46 IST