XL Tele to build solar farms in Spain, Portugal

Hyderabad-based XL Telecom & Energy has decided to establish a series of solar farms for power generation in Spain with a target of about 28 mw capacity for the first year.

While the investment for the year would be about Rs 1,000 crore, the company has set a medium-term target of installing close to 200 mw in Spain and Portugal, Managing Director Dinesh Kumar said today.

The project will be funded through debt and equity in the ratio of 1:4, with local banks contributing largely. "As the investments are being made in Saptashva Solar, a wholly owned subsidiary, the company is not thinking of a stake dilution in the parent company," said Dinesh Kumar. The company would also explore similar opportunities in other countries.

Based on the current policy and legislation, the project is expected to get a 25-year power purchase agreement (PPA) from a local utility company.

Saptashva Solar would generate about Rs 100 crore revenues in the first full year with 20 per cent margins for the next 25 years. The first solar farm of 2.3 mw would be implemented before March 2008 and the balance would be completed by the end of the same year, the company stated.

The proposed expansion model would have multi-fold benefits for XL. It will have the opportunity of emerging as the only player to focus on alternative energy generation in the world.

Besides, it will enable XL to move up in the solar value chain from being a solar photovoltaic panel supplier to a total system integrator. It will also create a larger market for its parent solar equipment company.

XL Telecom recently concluded an FCCB issue and raised about $40 million to part-fund its 120 mw solar cell manufacturing plant and expansion of module-making capacity with a total capital expenditure of Rs 300 crore.