Amplus Energy

The Indian solar sector is one of the hottest industries in the energy industry right now with massive expansion taking place due to falling prices and government support. A huge amount of money is flowing into the industry not only from domestic sources but also foreign channels. While the ground mounted large utility space remains quite healthy, the rooftop solar segment has failed to take off. The myriad problems in the Indian power industry as well as the lack of contractual faith is the key impediment facing the segment.

The involvement of the bankrupt distribution utilities has really made the whole rooftop solar industry face a huge hurdle. However, the economics of the rooftop solar segment remains so attractive that the industry is growing at almost a 100% CAGR despite these issues. Some of the biggest solar companies have started to make aggressive investments into the sector. Hero Future Energy, Azure Power, Renew and Ray Power are some of the biggies in the solar development space who have made a splash in the rooftop solar segment. Most of the companies are focusing on the industrial and commercial power segments where the economics of using solar energy over the normal grid power has become hugely attractive in terms of price differentials.

Also read What returns can I get from a Rooftop Solar System

Financing remains one of the major differentiators for these companies as customers are generally reluctant to finance such a back end loaded project. They prefer paying a steady stream of monthly fees for solar energy just as they do for the grid power. Amplus Energy which is a financing platform for the private equity giant I Squared Capital has become the biggest player in this financing space. It has been aggressively putting up rooftop solar projects in the country using the large pool of cheap capital that it has access to. It is one of the fastest deal makers in the rooftop solar segment space and already has a large sized portfolio. The company is planning to expand further by buying Kiran Energy which has 83 MW of rooftop solar projects with good PPAs in hand.

Note Kiran Energy which is a startup funded by other major private equity players like Bessemer is finding the going heavy against the big hitters in the solar energy industry. It makes sense for it to sell out at this time as the industry is consolidating around larger and well-funded platforms and companies. Startups will find it difficult to survive given the cut throat competition and need for a continuous source of funds.