XL Telecom to invest Rs1000 crore in solar power in Spain

Telecom and power sectors equipment and services supplier, XL Telecom & Energy Ltd, is entering the solar power generation sector with an initial investment of €168 million (Rs1000 crore) in Spain, the current global destination for grid connected solar energy.

The first solar farm of 2.3 MW will be implemented before March 2008 and the remaining are scheduled to be installed by December 2008.

To be executed by its wholly owned subsidiary Saptashva Solar Ltd, XL says it will establish a series of solar farms for power generation in Spain with a target for the first year of about 28 MW capacity.

Spain offers significant opportunities in solar power generations with its target of about 1,200 MW solar farms every year. The Spanish government supports the investments in solar power by offering land on a long lease basis and also subsidized long term bank loans.

The company's medium-term target is to install close to 200 MW capacity from such farms in Spain and surrounding Portugal. It says it is also exploring the feasibility of setting up such power farms in other countries.

The company says the project would enable it to move up the solar power value chain from being a supplier of solar photovoltaic panels to a total system integrated company.

The project is expected to have debt equity ratio of 1:4 and would be funded by local banks. As the investments are being made in the wholly owned subsidiary, XL Telecom & Energy Ltd does not envisaging any impact on its own balance sheet.

Based on the current Spanish policy, the project is expected to have 25 year power purchase agreement from the local power utility. During the first full year of operations, Saptashva would generate about €17.740 million worth of power with 20 per cent margins for next 25 years.