NEW DELHI: ACME Solar has aggressively pushed the India’s solar energy to expand its market share, particularly by pushing for lower tariffs for the clean technology. The company now weighs the option of putting 560 megawatts of capacity on the block for sale, potentially to fund future projects down its pipeline.
ACME recently announced through a statement that its bid won the contract to develop 200 MW at the Bhadla solar project, signing the deal with a historically low tariff of Rs. 2.44/unit. The win comes in contrast to the recent news of partially cancelled bids for 2,400 MW in a 3,000 MW tender ordered by the Solar Energy Corporation of India. The reason for the move was cited as high tariffs quoted by developers, including Renew Power and Softbank-led SB Energy.
Only ACME Solar’s bids were retained as the company quoted a low tariff of Rs. 2.44 per unit.
ACME’s current strategy sets them to raise around Rs. 3000 crores through an infrastructure investment trust (InvIT). These funds are to be used to set up over 2,500 MW capacity within the next two years, says industry executives. To add to this funding, ACME is considering selling 650 MW of their current capacity to the block.
“The money that they raise by selling these 650 MW capacity of solar projects, will help the company fund projects in their pipeline,” said an anonymous source from within the company in an interview with India’s Economic Times.
ACME CEO Nikhil Dhingra hass stated, however, that the company faces no difficulty in raising money for its projects, current and future.
“For next year, we only need to execute 400 MW of assets and our cash flow generation is around 550 crores annually which is more than enough to do 700 MW of assets annually given capital expenditure required has reduced substantially. Also our sponsor company is committed to fully fund the projects equity gap whenever there is a requirement although there doesn’t seem to be a requirement in near future,” an ACME company spokesperson said.
Dhingra said the company favors InvIT as its preferred mode of fund raising.
ACME has solar capacity of 5.5 GW (DC capacity), of which 2.4 GW is operational.
ACME’s strategy to target low tariff’s when bidding for projects seems to be paying off as they bag bid after bid. The issue of tariffs is a point of contention within the Indian solar market, with many developers claiming that the current cap set by the government at RS. 2.5/unit is unreasonable and would make solar projects economically nonviable.
The reluctance of Indian banking institutions to fund solar and other renewable projects was the centerpoint discussion of a recently called lenders’ meet hosted by India’s Power Minister. Financial institutions cited the nonperforming assets previously invested in, particularly in the thermal sector, as well as currency risks, and low solar tariffs.
“It is a tough time for developers with banks reluctant to fund projects, interest rates going up and Rupee depreciating. Then there are other downsides like steel prices going up and uncertainty because of GST, safeguard duty etc,” said Vinay Rustagi, managing director at Bridge to India.
“We have been saying for some time that bidding in the sector is very aggressive and it is ironical that the government wants tariffs to come down even more,” Rustagi added.
[Source: The Economic Times]