Inferior quality Chinese solar panels head towards India’s burgeoning but cutthroat market
December 10, 2015India plans to ratchet up its Renewable Purchase Obligation to 10% from 3%, even as state regulators fail to comply with the reduced targets
December 14, 2015India’s renewable energy industry is set to become the fastest growing RE market over the next 25 years. The Indian government has already set up a very high target over the next 7 years, planning to increase its RE capacity by 4x from around 35 GW now to 175 GW by 2022. India’s power minister wants that target to be further squeezed to 2020. Even long term, India will become the second largest energy market by 2040 overtaking USA as 300 million citizens get access to energy and its other citizens see an increase in their energy demand. Even though India’s RE market is buzzing with almost one new large solar tender announced each month, the environment for RE developers has not been too great given the massive competition which has dragged potential returns to new all-time lows. There is also a risk of some projects not getting built due to overambitious bidding.
In the midst of this hoopla, one of India’s largest RE developers Welspun Renewables has put itself on the block to be sold off. Note in 2013 and 2014, Welspun had really burnt the tires as it raced away to become the top RE developer. It has built the nation’s largest solar power plant in MP and also has numerous wind energy plants in its portfolio. However, the company which is a part of a larger conglomerate has been noticeably absent from the recent large bids. RE projects require a large upfront capex payment which entails a heavy equity investment. Welspun is evidently finding it tough to put up the equity in this tough environment. Many of the RE developers such as Renew, Azure, Mytrah, ACME are backed by large and powerful financial funds and companies. Even Tata Power is looking to divest equity in its RE arm, as it needs to raise hundreds of millions of dollars to increase its portfolio
India’s RE industry is overall going great guns, but the situation remains tough for individual RE developers.
Shares of Welspun Corp shot up nearly 8 per cent in Monday’s trade on media reports that the company has roped in investment bank Barclays to help the BK Goenka company sell its renewable energy business. Quoting two people with direct knowledge of the development, Economic said the move was made to trim company’s debt amid weakening business margins due to consistent fall in solar power prices.
2 Comments
Unfortunately when such established players are finding it difficult to go ahead, the expertise that they have built in executing the projects may go waste unless these people are funded.
Looks like the scene is slowly changing to developers building the project and then the project gets bought by investors who are more experienced in the asset management like what has been happening in Europe and US.
India is catching up fast.
Enjoyed your RE article .
What is your vision of utility scale solar project growth currently in India relative to rooftop solar installations?
Thank you for your insight in this progressive and volatile energy market.