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Photo: Bloomberg
Photo: Bloomberg

Fortum Corp to invest €200-400 million in India’s solar energy sector

India is the first country that the Finnish firm will invest in as part of its strategy to diversify globally

Mumbai: Finnish state-run utility Fortum Corp. will invest €200-400 million ( 1,500-3,000 crore) in India’s solar energy sector, making it the first country the clean energy firm will invest in as part of its strategy to diversify globally.

“Overall, Fortum is targeting a gigawatt-scale wind and solar portfolio. India is the first country Fortum has decided to enter, as the country offers one of the best solar resources and a sound government support for the development of the solar sector," Forum said in a statement on Tuesday.

The firm, which had global sales of €3.5 billion in 2015, will set up some large-scale greenfield projects in India to enable economies of scale and will also enter partnerships, or “other forms of cooperation, which would in the long term create a more asset-light structure," Fortum said.

Finland’s Fortum is the latest global corporation looking to set up renewable energy plants in India, which offers 300 days of sunlight a year.

India has a target of setting up 100 gigawatt (GW) of solar and 60GW of wind energy capacity by 2022 as part of the Narendra Modi-led government’s efforts to lower the dependence on coal-fuelled electricity.

This has seen global investors, including the renewable energy companies and pension funds, make a beeline for the country.

Fortum currently has only 15 megawatts (MW) of solar capacity in India. In January, it won a reverse auction for a 70MW project with a fixed tariff for 25 years. This month it has decided to bid for an additional 100MW in India, with a fixed tariff for 25 years. Its strategy will be to select projects from various central, state and PSU (public sectors undertaking) schemes which would guarantee a long-term power purchase agreement.

Utility competences are becoming increasingly important in the solar business, and expansion in solar fits very well in Fortum’s aim to be the frontrunner in clean energy, the statement said.

Fortum said it will “carefully select a few geographies with excellent solar conditions" to grow its business. It currently names the Nordic and the Baltic countries, and Russia, Poland and India as its key markets.

Last month, Ajay Piramal-controlled Piramal Enterprises Ltd and Dutch pension fund asset manager APG Asset Management said they will jointly invest $132 million ( 900 crore) in Essel Infrastructure Ltd’s solar platform across India.

Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) too announced an investment of $150 million in the renewable energy sector in India last month.

Global companies, including the US-based SunEdison Inc., Japanese telecommunications company SoftBank Corp., Italy’s Enel Green Power, French utility EDF, and Indian firms, including Welspun Renewables Ltd, Goldman Sachs-backed ReNew Power Ventures Pvt. Ltd, Morgan Stanley-owned Continuum Wind Energy Ltd, JP Morgan-backed Leap Green Energy Pvt. Ltd and NuPower Renewables Pvt. Ltd, are already expanding in the Indian clean energy market.

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