IDFC Alternatives, the asset management arm of the infrastructure-focused lender, is in talks to buy First Solar’s 200 megawatts (MW) of renewable power assets in India in a deal potentially valued at around $200 million, two people aware of the development said. Mint reported First Solar’s Indian asset sale plans on 20 March. First Solar, a US-based photovoltaic (PV) panel maker and one of the first overseas companies to enter India’s solar energy market, counts the country as its second-largest market after the US in terms of total shipments. “IDFC Alternatives is interested in acquiring First Solar’s power generation assets,” said one of the two people cited above, requesting anonymity. The second person who also didn’t wish to be identified confirmed the development. The development comes in the backdrop of falling solar power tariffs because of plunging prices of solar modules. Module prices are expected to drop further in 2017 as global supply exceeds demand.
Most solar power developers in India have been sourcing solar modules and equipment from countries such as China where they are cheaper. According to information available on its website, the infrastructure team of IDFC Alternatives has $1.8 billion under management. The Indian solar power generation space is getting intensely competitive. France’s Solairedirect SA won the rights to set up 250MW of solar plants at Kadapa in Andhra Pradesh and sell power to NTPC Ltd at a new record-low tariff of Rs3.15 per kilowatt hour (kWh) in an auction on Wednesday. The previous low was Rs2.97 per kWh for a 750MW project at Rewa in Madhya Pradesh. The winning bid offered a so-called levelized tariff—the value financially equivalent to different annual tariffs over the period of the power purchase agreement (PPA)—of around Rs3.30 per unit.
Spokespersons for First Solar and IDFC Alternatives declined to comment. India plans to generate 175 gigawatts (GW) of renewable energy capacity by 2022. Of this, 100GW is to come from solar power projects. There has been a spate of activity in the solar power space in India. Australia’s Macquarie Group Ltd plans to buy about 330MW of operational solar assets from Hindustan Powerprojects Pvt. Ltd for an enterprise value of $600 million. Marque deals in the Indian clean energy space include Tata Power Co. Ltd buying the entire 1.1 gigawatt renewable energy portfolio of Welspun Energy Ltd for $1.4 billion and Hyderabad-based Greenko Energies Pvt. Ltd, backed by Singapore’s sovereign wealth fund GIC Holdings Pte. and Abu Dhabi Investment Authority, acquiring SunEdison’s Indian assets for $392 million last year.
According to analysts, the country’s push for clean energy has gathered pace. India’s total renewable capacity including solar, wind, bio-mass and small hydro grew by around 11.2GW in FY 2016-17, similar to thermal capacity addition, which declined 50% in the year, according to consulting firm Bridge to India. “The country added 5,526MW of new solar capacity (up 83% over FY2015-16) and 5,400 MW of new wind capacity (up 63%) in the year,” Bridge to India wrote in a 20 March report.