Finance, solar

Welspun Energy to invest Rs.150 billion in next three years

According to reports, Welspun Energy Ltd, part of $3.5 billion Welspun group, will invest Rs.15,000 crore in three years to build wind and solar power generation capacity of 1,750MW.

By the end of 2013, it will invest Rs.3,000 crore in wind and solar projects, out of which 111MW is operational and 200MW is under construction, managing director Vineet Mittal said at a media briefing.

The rest of the capacity will come up by the end of 2016, out of which 1,000MW will be powered by wind and the remaining by sunlight, Mittal said.

Mittal also announced the tying up of funds for the 130 MW, Rs.1,175 crore solar power project at Neemuch in Madhya Pradesh, which the company got through competitive bidding in May. The project is expected to be completed in early 2014.

Welspun Energy borrowed Rs.885 crore from a group of banks led by Central Bank of India in non recourse financing, a loan secured by the revenue of the project the loan intends to fund, and nothing else.

“Many of our projects will start earning profits as the year progresses, so a lot of cash will be generated, which will be used to finance the equity portion of funding and the rest will be raised through debt,” Mittal said.

The Indian wind energy sector had an installed capacity of 18,552 MW on 31 January, according to official data, the fifth largest in the world. Lobby group Indian Wind Energy Association has estimated that the potential for the utilization of wind energy for electricity generation in the country is 102,000 MW.

The wind sector has a low gestation period, enabling timely commissioning of projects with limited risks of cost and time overruns, unlike hydropower or conventional power assets, said Sandeep Upadhyay, senior vice president and head of infrastructure and power at Centrum Capital Ltd, a brokerage.

“Cost per megawatt for executing wind power projects now has come down to approximately Rs.5 crore to Rs.5.5 crore. This further enhances the viability of projects,” Upadhyay said, adding there was a decent appetite for financing from private equity firms and lenders to support wind-focused independent power producers.

“It is a small but growing trend in solar sector that those who have firm power-purchase agreements with state-owned distribution utilities are able to raise non-recourse financing from financial institutions,” said Seshan Balakrishnan, director of the infrastructure practice at audit and consultancy firm Ernst & Young. “It is a welcome trend for the growth of solar power sector in India.”




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