Wind turbine maker Suzlon Energy Ltd on Wednesday announced its official entry into the solar energy segment, receiving letters of interest (LoI) for the 210 megawatts (MW) of solar power projects that it won in Telangana through a competitive bidding process in August 2015.
The projects will be completed through six separate special purpose vehicles (SPVs) across the state—one project of 100 megawatts, one of 50MW and four of 15MW each, Suzlon said. The firm had quoted tariff of between Rs.5.49 and Rs.5.69 per kilowatt hour (kWh) for the six projects.
Suzlon did not disclose the investments for these projects, but people in the industry with knowledge of the matter said the total cost for setting up a similar solar power capacity would be roughly Rs.1,300 crore.
State utility Southern Power Distribution Co.?of Telangana Ltd had in April 2015 invited bids for 2,000MW in solar photovoltaic projects by way of competitive bidding. The auction attracted more than 100 bidders and several firms, including SkyPower Global, Suzlon, Shapoorji Pallonji and Co. Ltd, Mytrah Energy Ltd, Acme Solar Energy Pvt. Ltd, ReNew Power Ventures Pvt. Ltd, won parts of the 2,000MW capacity at tariffs upward of Rs.5 per kWh.
Suzlon hopes to sign six power purchase agreements (PPAs) with state utilities for a 25-year period this month. The projects will be commissioned within the current financial year.
For Suzlon, which in recent years had struggled with muted growth, falling market share and high debt, the foray into the country’s sunrise sector will be a new avenue of growth. The company, which supplies turbines for wind energy producers, had a total consolidated debt of Rs.10,801.28 crore as of September 2015.
“Several companies that had earlier been focusing on the wind power market in India have now actively started looking at the solar market. This includes Ostro Energy, Mytrah and CLP Power India, apart from Suzlon,” said Jasmeet Khurana, associate director (consulting) at Bridge to India, a boutique consultancy.
India has a target of installing 100 gigawatts (GW) of solar power capacity and 60GW of wind power capacity by 2022.
Overseas investors and global renewable energy firms along with domestic firms are making a beeline for India—a market that is gaining prominence in the renewable energy segment.
At the state-held auctions, which require companies to manage land acquisition on their own, tariffs quoted have been upward of Rs.5. But projects won under the Jawaharlal Nehru National Solar Mission (NSM), where state-run NTPC Ltd is looking to provide ready infrastructure to developers within its solar parks, tariffs bids have turned aggressive.
Solar tariffs for projects bid under NSM touched a record low of Rs.4.63 when US-based SunEdison Inc. won a 500 MW tender by NTPC in November.
The Indian renewable energy unit of Japan’s SoftBank Group Corp. also won a project under NSM at Rs.4.63 in December.
“Solar and wind are complementary, hence we will leverage our project execution capabilities and end-to-end solutions to deliver solar projects,” said Tulsi Tanti, chairman of Suzlon?Group, in a statement. “We are also working on integrated renewable energy solutions by combining wind and solar projects at a single location.”
Of the six SPVs, one is already a Suzlon subsidiary while the other five have been acquired, the firm said in the statement. “These acquired companies do not have any operations or assets currently and are acquired primarily to be used as SPVs for the proposed solar projects,” said Suzlon in the statement.