10k-Mw clean energy projects for sale

Fresh investments sought to boost sector; market likely to see up to $3 billion of equity funding

The government's plan to attract investment in renewable energy seems to be headed for a success with old ventures - around 10,000 Mw solar and wind projects - scouting for fresh funding of up to $3 billion.

Close to a dozen companies are looking for fresh funding, preferably equity in projects that are either under construction or have been constructed. The companies are hopeful of enticing interest of global private equity firms.

Consolidation is likely to hit the sector with projects awarded under the first phase of the National Solar Mission in 2010-2012 seeing change of ownership, said market experts. Most small wind power players have also put their projects on sale.

With the government aiming to add 175,000 Mw capacity by 2022, there is renewed interest in the clean energy market. According to sources, solar players on the block are Greenko, SunEdison, Sky Power, Reliance CleanGen, NSL Power, Tata Power Renewable, Azure Power, IL&FS, etc. Similarly, wind power projects hoping for equity are Inox Wind, Orient Green Power, ReNew Power and others.

Companies are scouting for funds to acquire or win more projects as there is a dearth of capital in the market. "In the next 12 to 18 months, the industry is expecting close to 10,000 Mw of renewable power projects to be constructed. Fresh projects, especially solar, are already lined up during the same period. With rates going down, major players hope to be financially prepared," said an executive of a top financial consultancy.

Vikram Kailas, managing director, Mytrah Energy said, the company is looking to refinance 500 Mw of its projects. However, he did not reveal further details.

"Renewable energy projects can manage 75:25 debt-to-equity ratio. Primarily, the institutional investors are eyeing investment in Indian solar/wind projects," said Kailas with no reference to his projects.

Sunil Jain, chief executive officer, Hero Future Energies said, "Our wind and solar portfolio cumulatively stands at 260 Mw. We are aiming to become a one Gw company in the next 12 to 18 months. The capital, both debt and equity, requirement is approximately $700 million. We will raise project-level debts as and when required."

Azure Power, ReNew Power, Reliance CleanGen and SunEdison declined to respond to the queries sent over e-mail.

Welspun India is reportedly selling equity stake in its solar and wind projects totalling 400 MW. The company did not respond to the email seeking confirmation of this news. Solar power tariffs touched a new low last month with Andhra Pradesh receiving bid of Rs 4.73 per unit for its 500 Mw solar park from the US-based firm SunEdison.

"It is good to see investor appetite and sale in both primary and secondary market being active. However, this exuberance can go away easily if the challenges around evacuation and distribution of renewable power are not addressed. In the short term, the government's exuberance is undermining the issues around lack of evacuation and discom financing," said Rupesh Agarwal, partner, BDO India.

KEY TAKEAWAYS

• Close to a dozen companies involved in solar and wind power projects are looking for fresh funding
• Company officials say they are scouting for funds as there is a dearth of capital
• industry expects 10,000 Mw of solar renewable energy projects to be completed in 12 to 18 months
• Companies are hopeful of enticing interest of global private equity firms for projects that are either under construction or have those that are completed