Mumbai: SunEdison Inc., the world’s largest renewable energy company, expects to focus on Make in India, reduce the cost of renewable energy, and continue evaluating foreign direct investment (FDI) in India, chief executive Ahmad Chatila said in an interview on Monday.
US-based SunEdison, which is looking to consolidate its business globally and cut costs after a series of big acquisitions, has placed India on top of its priorities after the US.
The company, which started its India operations in January 2010, plans to develop over 15 gigawatts (GW) of wind and solar projects in the country by 2022.
“India for us is an important priority. We are going to be here in tough and good times," Chatila said.
The company has cut 15% of its workforce and walked away from many deals in the last few months. In November, it reshuffled management at its two yeildcos—TerraForm Power and TerraForm Global and sold 425 megawatts (MW) of projects in India to TerraForm Global for $231 million to repay debt.
In the yieldco model, SunEdison sells operating assets to the yieldco company, which collects revenue by selling electricity to pay dividends to shareholders.
The company last month walked away from a deal to acquire Singapore-based Continuum Wind Energy Ltd, which has assets in India. Last month the company’s aggressive bid for the tender of 500 MW capacity offered under the Jawaharlal Nehru National Solar Mission in Andhra Pradesh saw India’s solar power tariff touch a record-low of ₹ 4.63 per kWh (kilowatt-hour).
Chatila, who was speaking in an interview on his Mumbai visit, said SunEdison has been thinking about making investment commitments in India but its big investments toward the government’s Make in India initiative would take time to materialize.
“We’ve been thinking about it and looking at it for a while but these are big investments. The projects that we do in terms of power plants is easy, straightforward. Make in India is a little bit more complicated. We have been pushing a lot of our suppliers to be here. We want to do our own investment too, but these investments take billions of dollars. So to do them takes time to analyze and assess. It’s not something that we can do quickly in any country," he said.
It took two years for SunEdison to finalize a partnership with Samsung in Korea, Chatila said, while in Saudi Arabia the company has been looking at a $6 billion project in manufacturing since middle of 2013.
The ₹ 4.63 tariff has been called unviable by several industry observers. Chatila said he was surprised with the reactions to the development. Aggressive tariffs could prove to disappoint investors looking for steady returns, Mint reported on Monday, quoting experts.
The cost of solar, since the company started operations in India, have fallen about 80%, Chatila said. “The Chinese modules used to cost a little bit less than 50 cents a year ago, today they cost 40 cents. By end of next year or 2017, they will cost 35 cents. This is not about SunEdison, this is how the world is moving."
Chatila said other companies are soon going to figure out a model around the new low tariff. “We have been saying since July 2014 to the government here and everywhere that solar will be competitive with imported coal at $65 per metric tonne... We have given the spreadsheet of our model to the government. The top officials of the government in India asked us if they can share it with our rivals and we told them yes."
Chatila, who became president and CEO and a member of the board in March 2009, said the Indian government has been taking the right actions to grow the renewable energy sector. “Many people want perfection, but I actually travel to many countries and the Indian government is doing much better than almost all countries on policy and everything else, especially in renewables."
In 2016, the company plans to add 3.3-3.7GW of new capacity globally, of which India will make up for about 20-25%.
Chatila said his company will participate in several of the upcoming auctions under the Jawaharlal Nehru National Solar Mission (NSM), which the country launched in 2010 with the aim of adding 20GW of grid-connected solar power to India’s energy mix by 2022 in three phases.
India has raised its 2022 solar energy target to 100GW from 20GW as part of the Narendra Modi-led National Democratic Alliance government’s efforts to lower dependence on coal-fuelled electricity.