Aditya Birla Nuvo finally gets its act together in the solar energy arena

The Aditya Birla Group has been into solar energy for a long time, without really making any remarkable contributions to this area. The Group which is one of India’s largest conglomerates counts some of the biggest energy consuming companies such as Hindalco. The Group has been watching the recent solar tenders which has seen new lows being made in bids. Many of the larger power companies such as SJVN, CLP etc. have found the solar bids to be absurdly low and stayed away from the auctions. In recent times, the tenders have been won by one or two bidders, despite the presence of numerous players trying to get a piece of India’s massive growing renewable energy pie. The NTPC 500 MW tender in AP saw as many as 70 players participate, but only SunEdison was a winner getting all the 500 MW on offer at just Rs 4.63/kWh. While many companies are complaining of the bids being too low and winners taking huge risks in aggressive bids, they have also started to play the game.

Aditya Birla Nuvo has also won 150 MW in a recent Haryana tender, with a very low bid of just Rs 5.08/kWh (7cents/kWh). While this is 10% higher than the AP tender bid, one must remember that the conditions in Haryana are quite different.

The land costs in Haryana are extremely high, which makes it difficult to cite large solar power plants in the state. The 150 MW solar power plant will require 750 acres, which is hugely difficult in a state where land costs are more like 25 lakhs/acre. AB Nuvo has smartly decided to build the power plant in the adjacent desert state of Rajasthan and wheel the power to Haryana. Though wheeling charges of around 5% of the total cost will have to be borne, it still makes sense since the land cost in Rajasthan will be 1/5^th that of Haryana.

In October Aditya Birla Group also partnered with private equity investor Abraaj Group, in order to develop utility-scale solar power plants in India. It sold 49% in a solar power platform named Aditya Birla Renewables Limited, to Abraaj Group.