One of India’s largest foreign investors in its power sector, CLP India Pvt. Ltd intends to enter the solar energy sector in order to grow the number of shares it holds in renewables. The Hong Kong-listed CLP Holdings Ltd unit is planning a $1 billion investment in return for 1GW of solar power capacity during the next 3-5 years, as shared by the director of business development (renewables), Mahesh Makhija.
According to Makhija, CLP India will bid for solar projects under Jawaharlal Nehru National Solar Mission (JNNSM) and invest in further projects won by others. In order for India to meet its 2022 target of 100GW of solar power and 60,000MW of wind power, the country will need as much as US $200 billion. As a result, global investors, international renewable energy companies, pension and investment funds are flocking to India.
CLP India has been exploring opportunities with Suzlon Energy Ltd; with the idea of buying a 49 per cent stake in a 100MW project won by the company at a tariff of Rs. 5.59kWh. The total cost of the project exceeded $110 million (Rs. 740 crores).
Suzlon received letters of interest in a 210MW project, which also includes the 100MW plant. In January 2016, Suzlon signed long-term power purchase agreements (PPAs) with state utilities. As mandated by the PPA, Suzlon will build and manage engineering, construction, and procurement (EPC), as well as continue to hold 51 per cent for one-year post completion.
“We are looking at the companies that have already bid for projects and won them and are looking for investors. There are some good investment opportunities available in the market and we are looking at them actively,” Makhija said.
According to Jasmeet Khurana, Associate Director at boutique consultancy Bridge to India; “Anyone, who was—not just in wind—but any part of the power sector, is seeing that the growth opportunity in solar is much larger. The sense that we are getting is everyone, who has been in either traditional or renewable power generation business, is actively looking at investment in solar in some way or the other.”
Numerous renewable energy producers are seeking investors and partners to complete projects already committed to. Canadian solar energy developer SkyPower Ltd entered into an agreement with BYD Co. Ltd, the Chinese battery technology firm, to submit joint bids in upcoming tenders for solar power projects. Indian multinationals Mahindra and Tata Group too, are working on rapidly adding new solar capacities.
US-based SunEdison Inc. and Japan’s SoftBank Group won solar projects at aggressively bid tariff of Rs.4.63. SunEdison is eager to attract investment in all its India projects.
CLP India operates over 3000MW of power capacity across its wind, coal, and gas-based projects. With plants in Bharuch, Gujarat, and Jhajjar, Haryana, the company announced in January 2015 that it will inject $2 billion investment in the expansion of projects in the country.
Solar energy tariffs are becoming more and more competitive, falling to a record-low per unit in January 2016 at Rs.434. It was a result of aggressive bidding to win projects under government provided solar parks.
Makhija says: “Solar has now become manageable in the country as far as the tariffs are concerned. When at Rs.18, the tariffs were too high to be sustainable. With tariffs coming down we thought it was a good time to start solar. The last couple of years we’ve been making a lot of effort to put up a bid together.”