IDFC Alternatives eyes First Solar's $200 mn assets in India: report

IDFC Alternatives is reported to be looking to buy First Solar's 200 MW of renewable power assets in India in a deal potentially valued at around $200 million.

IDFC Alternatives, the asset management arm of the infrastructure-focused lender, is currently in talks to buy First Solar's 200 megawatts (MW) of renewable power assets in India, a Mint report said quoting two people close to the development.

First Solar, a US-based photovoltaic (PV) panel maker, was one of the first overseas companies to enter India's solar energy market and counts the country as its second-largest market after the US in terms of total shipments.

India is becoming a not-so-attractive market for solar power producers in the backdrop of falling solar tariffs.

Solar power ratea fell to Rs3.15 per unit in the latest round of auction of a 250MW project at Kadapa in Andhra Pradesh.

France's Solairedirect SA is reported to have won the rights to set up 250MW of solar plants at Kadapa in Andhra Pradesh and sell power to NTPC Ltd at Rs3.15 per kilowatt hour (kWh) in an auction today.

The previous low was Rs2.97 per kWh for a 750MW project at Rewa in Madhya Pradesh.

Although the constant drop in tariff is due to the government's liberal policy interventions, such as waiver of transmission and wheeling costs along with other various subsidies, the falling tariffs also point to falling returns for investors.

The Indian solar power generation segment is getting intensely competitive. Most solar power developers in India have been sourcing solar modules and equipment from countries such as China where they are cheaper.

India plans to generate 175 gigawatts (GW) of renewable energy capacity by 2022. Of this, 100GW is to come from solar power projects.

With a target of 175GW of renewable power generation by 2022 and 100GW of which coming from solar energy, the solar sector in India has been abuzz with activity.

"The country added 5,526MW of new solar capacity (up 83 per cent over FY16) and 5,400MW of new wind capacity (up 63 per cent) in the year. While these numbers are impressive, it is worth noting that the solar capacity addition, including rooftop solar is almost 50 per cent below the annual target of 12,000MW. In contrast, wind capacity addition was 35 per cent over the 4,000MW target," a report by market research firm Bridge to India says.

According to information available on its website, the infrastructure team of IDFC Alternatives has $1.8 billion under management.

India's total renewable capacity including solar, wind, bio-mass and small hydro grew by around 11.2 GW in FY 2016-17, similar to thermal capacity addition, which declined 50 per cent in the year, according to Bridge to India.