India Renewable Energy Market Growth -Joint Venture of CLP India and Suzlon Energy
India Renewable Energy Market Growth – Space is buzzing with activity after Tata Powers’ decision to buy Welspun Renewables last week, CLP India, one of the largest foreign investors in the Indian Power sector also announces that it will buy 49% stake in Suzlon Solar Power assets.
CLP India, the Indian arm of Hongkong based China Light and Power wants more than a footprint in India’s Thermal energy and wind energy space. It wants to forge a name for itself in the solar energy sector as well and is decided to do this through the acquisition route and perhaps that’s why it has decided to buy a 49% in Suzlon’s 100MW solar power assets with the deal enterprise value at around 760 crores. The project already has power purchased agreement signed at Rs.5.59 paise per unit. The significant advantage considering tariffs costs in renewable energy have been going southwards in the last few months. CLP India says this acquisition is just one step in meeting its target of having renewable energy account for 20% of power generation by 2020. This project, indeed, will make sense and gives the investors the returns that they are looking for which also fits into the strategic vision of planning to invest about 250-300MW per annum in India’s renewable capacity. CLP India also holds the option to acquire the remaining 51% of the project one year after it becomes operational and acting stands that sounds like a good deal to the acquirer.
The risk for the particular project is also very crucial at this point as this project has already achieved quite a few milestones as more than half the land has already been acquired, work on evacuation infrastructure has already commenced. Experts say such deals are just the beginning and more will follow as consolidation in the renewable energy space gathers a team. However, problems related to finding, low tariffs, and demand from this could still play spoilsport unless the government does something to set things right.
India renewable energy market is growing almost by the 30% growth if we compared to the last financial year where India has done about 2300MW of the wind projects while this year it is expected to be 3200MW. Currently, India has nearly 1200MWs order under the pipelines for discussion and negotiation in different states. Suzlon is also into expanding three new manufacturing facilities, in Andhra Pradesh, Rajasthan and one in Madhya Pradesh with an investment of 150 crores in these facilities and also increasing base up to the 4,000MW level.