IDFC Alternatives is set to make its biggest acquisition till date by taking over the entire 200 megawatts of First Solar’s operational portfolio of solar power projects in India for around Rs 1,950 crore ($300 million) as consolidation picks up momentum in the renewable energy sector. These projects — seven in all — are located in Telangana and Andhra Pradesh. The definitive agreements between both parties have been signed and a formal announcement is expected soon.
First Solar is an American photovoltaic (PV) manufacturer of rigid thin film modules, or solar panels, and a provider of utility-scale PV power plants and supporting services like finance, construction, maintenance and end-of-life panel recycling. In India, it has supplied over 1gigawatt (GW) worth of panels while globally its supplies are worth over 17 GWs, according to the company’s website.
This is the first such divestment by the firm in India. A clutch of under-construction assets have been kept out of the ambit of this transaction for the time being as they lack operating and payment history but may get added subsequently.
The First Solar acquisition will be carried out by a platform company wholly owned by IDFC’s infrastructure fund called Vector Green. Vector Green in the past has acquired a 24 MW wind asset from Naveen Jindal’s Jindal Steel and Power and another 40 MW solar project from Punj Lloyd.
More such consolidation is expected between smaller generators or equipment makers as the margins are getting squeezed in wind and solar energy on account of competitive bidding which is having a direct bearing on EPC or turnkey project developers. However the ownership will predominantly rest with bigger players like Greenko, ReNew, Tatas and maybe even Softbank or the larger financial sponsors.
The next 12 months will be interesting for wind and solar sectors from a regulatory and competitive intensity standpoint. The same will also determine as to how much incremental capital will keep flowing into these sectors.