Global investor interest in India’s renewable energy sector is plateauing as concerns grow on aggressive bidding in the solar energy space, the health of state electricity distribution utilities and power grid infrastructure, said Vikram Kailas, Managing Director of Mytrah Energy.
“Initially, the investor interest was very positive about the Indian renewable energy sector but it is plateauing or even declining now…the UDAY (Ujwal DISCOM Assurance Yojana) is there but it will take time to show results. Investors are also worried about the aggressive bidding in the solar energy space,” Kailas told BusinessLine.
“The problem is you only need two or three companies to collapse after taking the loan and building the asset which then gets stranded to give the whole industry a bad name. I think investors are also worried about the debt capital market and whether domestic banks have money to fund 175 GW of renewable energy,” Kailas added.
Mytrah Energy has a portfolio of around 800 MW of operating wind assets in India and 500 MW of to be commissioned solar power projects. The company tapped into global funds as early as 2010 when it raised $80 million in the London Stock Exchange’s AIM Segment from institutional investors such as Capital Group, BlackRock and Henderson.
Subsequently, the company has also raised $700 million of mezzanine and senior debt till 2016 to construct its wind energy projects. Kailas added that a large portion of Mytrah Energy’s debt for its project comes from foreign sources. Typically, the projects are funded 75 per cent through debt.
“Out of this, probably about 50 per cent comes from foreign sources while 25 per cent comes through domestic funding. But, what we try to do is keep the tenor of the loans for a longer duration as it allows us to get best quality panels and have the ability to recycle the cash flows,” he said. Mytrah which recently raised $175 million of loans from the Asian Development Bank is also in talks with more such development finance institutions to raise more funds. Besides, it will also consider selling minority investors in its special purpose vehicles for its renewable energy projects.
Across its solar portfolio which is expected to be commissioned in the next 12 months, Kailas said the company will get an average tariff of ₹5.65 a unit.
“We will continue to bid for solar at tariffs that we think make sense rather than just to acquire capacity. In my view, if it’s the National Solar Mission, then, the sustainable tariffs can be around ₹5 a unit and for state bids, around ₹5.5 a unit,” he added.
The company’s average tariff across its wind energy projects is much lower and less than ₹5 a unit. However, Kailas claims the company still makes money from these projects.