Adani Enterprises may partner with another manufacturer, says a
person familiar with the development
Original Post: Utpal Bhaskar, Live Mint
Photo:
Bloomberg
New Delhi: Adani Enterprises Ltd’s plans to set up a
$4 billion solar photovoltaic manufacturing facility in partnership with
US-based SunEdison Inc. may come unstuck.
“It is not working out.
Adani Enterprises may partner with another manufacturer,” said a person familiar
with the development who spoke on condition of anonymity.
A second person aware of
the development confirmed it, but asked not to be identified.
Spokespersons for Adani
Enterprises and SunEdison didn’t respond to an email sent on 7 August and
subsequent reminders seeking comment.
On 20 August, Reuters reported
that the Adani Group was in talks with Japan’s SoftBank Corp. and Foxconn
Technology Co. Ltd to secure investment in a $3 billion project to make solar
cells and panels in the country. It added, citing an unnamed source, that Adani
and SunEdison had ended their proposed partnership in June.
Meanwhile, SunEdison has
been firming up its India strategy. It recently agreed to acquire Continuum
Wind Energy Ltd, a Singapore-based company which owns and operates 242
megawatts (MW) of wind power plants in Maharashtra and Gujarat, besides a 170MW
wind power unit under construction in Madhya Pradesh.
Also, it signed a
long-term power purchase agreement with Tata Power Delhi Distribution Ltd to
provide 180MW of electricity.
The National Democratic
Alliance government has pushed renewable energy to the top of its energy
security agenda and is looking to provide green power at less than Rs.4.50 per unit. India needs as much as $200
billion to meet its target of installing 100 gigawatts (GW) of solar power and
60,000MW of wind power by 2022.
The Adani-SunEdison
facility was to be constructed in Mundra, Gujarat. A memorandum of
understanding to the effect was signed in the backdrop of the seventh Vibrant
Gujarat summit in January, inaugurated by Prime Minister Narendra Modi in
Gandhinagar.
“The facility will
create enough solar panels to fuel substantial solar growth in India,
furthering India’s goals for clean, renewable energy independence, and will add
up to 20,000 jobs to the local economy,” Adani Enterprises and SunEdison said
in a joint statement on 11 January.
“During the first half
of 2015, SunEdison and Adani will complete a comprehensive analysis of the
joint venture opportunity and business plan. Pending successful outcome of the
study, construction of the facility will begin shortly thereafter,” the
statement said, adding, ‘The new $4 billion facility will be constructed in
Mundra, Gujarat, India, over a three to four year period. This facility will
vertically integrate all aspects of solar panel production on site, including
Polysilicon refining, ingots, wafers, cells and panels production with a
broader ecosystem involving extended supply chain for raw materials and
consumables,” the statement added.
There has been growing
interest from overseas investors in the Indian renewable energy space. Russia’s
OAO Rosneft, the world’s largest publicly traded oil company, US-based First
Solar and China’s Trina Solar are among the firms looking for opportunities in
India’s solar energy sector. In June, SoftBank, along with Bharti Enterprises
Ltd and Taiwan’s Foxconn Technology, proposed to invest at least $20 billion in
solar energy projects in India through a joint venture, SBG Cleantech Ltd.
According to the
government, the Indian clean energy market is largely driven by asset-based
finance to the extent of 94% of the total investment in the sector.
In India, the world’s
biggest greenhouse gas emitter after the US and China, renewable energy
currently accounts for only 13%, or 35,777MW, of the total installed power capacity
of 2,74,818MW.
Analysts believe that
local manufacturing of solar power generation and transmission equipment will
play an important role as the country builds up its solar energy capacity.
“The associated industry of solar cell
manufacturing, power storage and transmission equipment technology cycles are
contracting, and finance needs to evolve accordingly to provide a definitive
boost. A short-term financing approach focuses only on current technologies
which have shorter shelf life and expects higher returns. Alternatively,
investors now need to finance businesses not products, adopting a long-term
approach, as it is the adaptability of business to environment and
technologies’ that form the pillars of success,” Yes Bank Ltd said in a 19
August report.
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