Mumbai: Trina Solar, a leading Chinese manufacturer of solar modules and photovoltaic cells, is keen to invest in solar power projects in India, as part of a wider play to drum up market interest for its own modules. The company intends to invest in under-construction solar power projects and is eyeing distress opportunities in the domestic renewable energy sector.
In India, Trina Solar has tied up with a local partner Engenrin Energy Private Ltd for its development and engineering-procurement-construction (EPC) businesses. Engenrin Energy is a renewable energy startup, run by Raj Kumar Roy.
Speaking to Mint, Roy said: “Trina Solar is keen to expand their project development businesses in India by either partnering with large developers to offer EPC-plus-financing or by buying out projects struggling for finance. Trina's strategy, across Asia and Australia, is to develop a project of global standards and then sell these de-risked cash flow-generating projects to pure financial investors."
For Trina, this is a win-win situation. As a solar module manufacturer, Trina is presently among the top five suppliers to Indian power developers. While the company will not participate in the reverse auction process to bid for new projects, it will help under-construction projects reach completion. The projects will be completed with Trina modules and the Chinese firm will also provide long-term project financing to the developer at a competitive USD rate of interest. Once the project is operational, if the developer can't provide an exit to Trina on its investment either through alternate financing or by sale of the project, Trina will exercise its right to take over the asset.
“Trina definitely feels that they need to increase their market share and the development strategy will help increase their share in Indian market given that these projects will be set up with Trina modules," Roy said. So far, Trina has evaluated four to five such projects in India and is currently at an advanced stage of evaluating assets of 50-150 MW size in Gujarat and Odisha. Their target is to do 100-150 MW projects in first year and then scale up based on the experience with these projects.
For the past 18 months, project execution in utility scale renewable capacity addition has slowed down. Research from renewable energy consultancy Bridge to India estimated that that in Q3 2019, capacity addition stood at only 2,549 MW (solar 2,114 MW, wind 435MW), at about two-thirds of scheduled capacity addition and far below the record high of 5,111 MW added in Q1 2018. Problems in land acquisition, transmission connectivity, reneging of long-term power purchase agreements and a lack of adequate debt financing are among the main reasons that new solar power plants aren’t being set up as fast as before any more.
Roy believes that as this situation continues, the size of distressed renewables market in India will expand and will grow to a multi-GW scale over a very short horizon. “India, with its sheer size of the renewables market and challenging liquidity situation, presents attractive investment opportunities across the entire spectrum ranging from green field development to fully operational but financially stressed assets for investors who are diligent, patient and disciplined," Roy said.