French energy company Engie SA is in talks with Delhi-based Applied Solar Technologies (AST) for a partnership to provide off-grid power to the telecom and banking sectors.
AST’s solar hybrid solution model uses a combination of solar photovoltaic cells, battery back-up and diesel generators to offer round-the-clock electricity to telecom towers and ATMs in a business where downtime penalties are steep.
“Engie is exploring a partnership with AST. The potential for growth in this segment is huge,” said a person aware of the development, requesting anonymity.
AST’s investors include Future Fund, the Australian government’s sovereign wealth fund; Bessemer Venture Partners (BVP); Capricorn Investment Group; and World Bank investment arm International Finance Corp. (IFC).
“While this is a growth area, the penalties for downtime are very high given the critical nature of the services rendered to the banks and telecom firms,” said another person aware of the development, who also declined to be named.
Engie’s interest comes at a time of structural shift in India’s electricity sector due to disruptions caused by record low green energy tariffs. While India’s solar power tariff registered an all-time low of Rs2.44 per kilowatt hour (kWh) in May, wind power tariffs hit a record low of Rs3.46 per unit in February.
Also, Engie (formerly GDF Suez SA) sold its Meenakshi Energy coal-fired thermal plant in Andhra Pradesh to India Power Corp. Ltd, a Kanoria family trust entity, last year as it sought to exit all coal-fired projects.
There is a growing interest in the Indian solar off-grid energy segment, with states looking to renege on their offtake commitments for projects awarded at a comparatively higher tariff.
“The recent attempts by state-owned distribution utilities (discoms) in states like Andhra Pradesh, Karnataka and Uttar Pradesh to renegotiate or cancel signed power purchase agreements (PPAs) with wind and solar power developers are likely to have an adverse impact on the renewable energy sector,” ratings agency Icra Ltd said in a 21 August statement.
The AST model also helps reduce the quantum of costly electricity generated from diesel generator sets, which is estimated to be around 50,000 megawatts (MW). Off-grid solar energy solutions offer an opportunity for around 304 million Indians who don’t have electricity access. India has a 750 gigawatt (GW) potential on account of enjoying 300 sunny days a year, with an average solar radiation range of 4-7 per kWh.
While Engie’s India country manager in an emailed response said, “I can only say that Engie does not comment on market rumours”, queries emailed on Tuesday to AST co-founder Vinod Agarwal and the spokespersons of Future Fund, BVP, Capricorn Investment Group and IFC remained unanswered.
As part of its growth strategy, Engie is in talks with the country’s largest roof manufacturer Everest Industries Ltd for a partnership for solar-ready roofs, Mint reported on 11 August. It is also exploring the acquisition of projects from Singapore-based renewable energy developer Equis Energy’s India portfolio, which comprises green energy platforms Energon and Energon Soleq.
Engie has been trying to set up a 2GW capacity by 2019. Its subsidiary Solairedirect has been actively bidding for solar power projects and has a 810MW portfolio. Its interest in India stems from the government’s ambitious clean energy target of 175GW by 2022. Of this, 100GW is to be generated by solar projects and 60GW by wind projects.