To overcome financing obstacles for solar projects in India, foreign companies start to use their own equity. Fortum OYJ, a Finnish power company, which recently won a 70 MW solar power project in the Indian state of Rajasthan at record low levels – 4.34 INR ($0.07) per kWh, has decided to self-finance its solar projects in India.
Speaking to Bloomberg, Managing Director Sanjay Aggarwal said, “We’re very clear, we would bring in our funds.” Fortum wants to construct the project on its own and involve the banks/lenders once the projects become operational. This, it believes, will give lenders some confidence in the viability of the project. Experts feel this will be a cost-saving exercise for Fortum, which does not have to pay the massive interest on debt undertaken.
The country’s target of 100 GW of installed solar power capacity by 2022, has got many foreign developers interested in the market. SunEdison was one of the first ones, but suffering from huge debt and currently in bankruptcy proceedings it is currently on the lookout for equity partners for its solar project pipeline in the country – and Fortum was said to be one of the interested parties (see New rumours about SunEdison’s India Assets).
The Finnish power company announced recently that it plans to invest €200 to €400 million in solar projects in India. It currently has a pipeline of 170 MW of solar projects in India that it has won in various auctions.