Hong Kong’s CLP Group, the largest overseas investor in power in India, wants a piece of the country’s solar energy action. CLP (formerly China Light & Power), is finalising its solar debut through an acquisition. It’s local arm is in advanced negotiations to buy stakes in a 100 MW solar park project in Telengana from Suzlon Energy, according to people in the know. The diversification of CLP India’s clean energy portfolio comes after the company established itself as the leading wind power generator in the country with almost a gigawatt of operating assets. If the deal goes through–a formal announcement is expected in a few days barring hiccups–it will give a big boost to the domestic solar power industry, underscoring global interest even in secondary market brownfield or even greenfield growth opportunities. An estimated 10,000 MW of solar and wind projects are believed to be on the block, seeking equity investments to the tune of Rs 20,000 crore, according to sector experts. India’s solar energy sector has seen record capacity additions while tariff bids for new projects have fallen to unprecedented lows as the government is pushing hard to achieve the ambitious target of 100,000 MW of grid-connected solar power by 2022. To comply with power purchase agreement (PPA) norms, CLP India will first acquire 49% of the project and, a year after its commissioning, take majority control and may even buy Suzlon out entirely, said the people cited above. Suzlon will however remain involved with the engineering, procurement and construction (EPC) work. The Rs 800 crore project needs Rs 150 crore of equity and the rest will be financed through debt. The country’s second-largest wind turbine manufacturer, Suzlon made its entry into solar in January by winning the rights to set up 210 MW of solar plants in Telangana in this financial year across six projects. The largest is the 100 MW one that Suzlon is planning to monetise first, the others being one of 50 MW and four of 15 MW each. The 100 MW project is due for commissioning on May 31, 2017.Suzlon declined to comment, saying it was in a ‘silent period’ ahead of results on May 30. CLP India said it wouldn’t comment on specific transactions but a spokesperson said the company is looking to increase the proportion of clean energy and non-carbon technologies in its portfolio as part of a global strategy and aims to add 250-300 MW of renewable energy in India every year. The company will continue to expand its wind energy portfolio, currently at a committed capacity of over 1,050 MW, he said. “Solar power has experienced great thrust from the Indian government and the favourable policies make the sector attractive and create a conducive environment for us,” saidMahesh Makhija, director, commercial, renewables, CLP India. “Our strategy is to build a balanced a portfolio by adding solar power to complement our wind capacities.” He elaborated on the company’s growth strategy for India. “We are focused on accessing various avenues in the market including bidding for projects, joint ventures, industrial markets and pre-bid agreements,” he said. “However, I cannot comment on specifics at this stage and as a policy we do not comment on speculation.” CLP entered the Indian power sector in 2002 with the acquisition of a 655 MW gas-fired power plant in Gujarat and is among the few foreign players that have a presence in conventional energy in the country. It hasn’t participated in the highly competitive bidding that has seen solar tariffs fall to as low as Rs 4.34/KW-hr but expects to join in as rates are seen to be stabilising above Rs 5 per unit following recent auctions in Jharkhand , Karnataka or Rajasthan . Struggling to repay Rs 9,500 crore of loans, Suzlon was given a two-year moratorium on principal and interest payments and additional working capital as part of a debt recast in 2013. The company is using its engineering and project execution skills to duplicate its wind energy business model, where it developed projects and took over all execution risks and then sold stakes to investors. “Several EPC players including Suzlon Mahindra Susten, Sterling & Wilson are getting into development with the purpose of bringing on board a generation partner who can develop the project,” said a person with knowledge of the matter. “That way both can focus on their core and leverage on each other’s strengths. This will be among the first of its kind JV experiment and if successful, will offer a future template for others.
Source: ET Bureau
Source: ET Bureau
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