The likely collapse of SunEdison Inc’s solar project in India, the first of 32 planned “ultra mega” complexes, could delay Prime Minister Narendra Modi’s goal to increase renewable energy five-fold by
The likely collapse of SunEdison Inc’s solar project in India, the first of 32 planned “ultra mega” complexes, could delay Prime Minister Narendra Modi’s goal to increase renewable energy five-fold by several years and probably cost consumers more.
As the US solar giant fights to stave off bankruptcy, the 500 megawatt project in Andhra Pradesh state it won last November lies idle with ground yet to be broken. The other projects are still to be bid on.
In a statement, Terra-form Global Inc, a unit of SunEdison, said: “Due to Sunedison's liquidity difficulties, there is a substantial risk that Sunedison will soon seek bankruptcy protection... Sunedison has not or may not be able to perform under other deals, including pending dropdown of some India project portfolio of 425 MW bought by Terraform Global Llc.”
It’s doubtful any rival will pick up the project at the aggressive power pricing promised by SunE-dison, which beat out 29 other bidders with a record-low tariff of Rs 4.63 per kilowatt-hour or unit.
That will force Indian officials to tighten auction rules to ensure that only serious, bankable bidders show up, industry sources said. India plans to auction more of the “ultra mega” projects — those which generate at least 500 MW — in the current fiscal year through to March 2017.
“There is always a tradeoff,” Upendra Tripathy, secretary at the Ministry of New and Renewable Energy, said referring to the renewable energy auctions.
“There can be a relaxed condition so that more people can participate and there is another where you can make sure fly-by-night operators can’t come in. It’s an ongoing process and we are open to suggestions.”
Tightening auction rules could slow the pace at which projects are awarded and built, pushing back Mr Modi’s goal of expanding solar capacity to 100 gigawatts by 2020 to the middle of the decade, say officials.
Mr Tripathy, however, said India will for now stick to its goal, set by Mr Modi soon after taking office in 2014, and that it has planned for SunEdison-like bumps in the road with a strong project pipeline.
SunEdison drew criticism from analysts for its low winning bid for the Andhra project.
The company is now exploring a sale of its Indian assets of around one gigawatt or seeking partners for them, sources said, and has drawn preliminary interest from billionaire Gautam Adani’s fast-expanding Adani Group. Apart from the Andhra Pradesh project, SunEdison has several other small plants under construction across India.
A person close to Adani said the low tariff agreed for the Andhra plant will make any deal with SunEdison difficult for Indian firms, which have a relatively high cost of capital. If no buyer is found, the project could be re-bid, the industry sources said.
SunEdison did not respond to request for comment.
