SunEdison, the world’s biggest renewable energy company, plans to offload equity in a 500 megawatt project it won in India by making a bid that rivals said was too low to make commercial sense.The US company has approached potential buyers for the sale of equity and has consulted investment bankers to value the project it won in November with a bid of Rs 4.63 per unit in an auction conducted by NTPCBSE 2.41 % for solar plants in Andhra Pradesh under the Jawaharlal Nehru National Solar Mission, industry sources said.
SunEdison can sell up to a 49% stake in the project initially and can exit only one year after it is commissioned.Pashupathy Gopalan, President, Asia Pacific, at SunEdison did not rule out the possibility of bringing in equity partner as allowed by the PPA. “We are always looking for equity investors as a business model in addition to selling our assets to our YieldCo” he said. “The power purchase agreement (PPA) we’re about to sign for the Andhra project allows us to sell up to 49% stake after signing the PPA” But he insisted that SunEdison was extremely serious about executing the project.
“We have made an equity infusion of Rs 120 crore into the company and have submitted performance bank guarantees of Rs 150 crore to NTPC. We have done all the paperwork and are waiting for NTPC’s response before signing the PPA,” he added. Was he likely to sell the project a year later? “In our business model, we will continue to explore three strategies on an ongoing basis – holding assets in our balance sheet, selling assets to our YieldCo and partnering with third party investors”.SunEdison’s bid of Rs 4.63 per unit, which was the lowest ever at that time, had rattled the industry, prompting rivals to question the viability of the tariff, which is comparable to new coal-fired power plants. “My sense is that doing the project all alone is proving difficult for the company and it is looking for some financial arrangements,” said a rival developer.
Analysts said that if SunEdison exits the project, it would help the parent company, which has faced a harrowing time. Its stock price in New York has plunged on concerns of a massive debt burden, business performance and market worries about aggressive acquisition of assets.There was widespread speculation last November that the company intended to sell 425 MW of renewable assets in India to pare debt, which was $11.7 billion as of September 30. The assets were sold to TerraForm Global, a SunEdison company that owns and operates renewable energy plants, for $231 million.
SunEdison also called off the acquisition of Continuum Wind Energy, a Singapore-based company with assets in India, which it had announced last June. It terminated a $700 million deal to buy renewable energy company Latin American Power, with assets in Chile and Peru, and announced last October that it was cutting 15% of its workforce.”I was wondering why, when it could not honour older commitments, SunEdison went ahead and won the Andhra project,” said a sector analyst.”In an earlier bid in 2015 for 100 MW, which SunEdison won, it gave up 20 MW,” said a senior government official who has followed the bidding process closely. “The bank guarantee was encashed by the government. It is having difficulty organising the money for the Andhra project too. This is a very capable company, no doubt, but it doesn’t have cash. Lenders are not giving money because it has too much debt.”