India’s first solar auction, planned to boost clean energy in the world’s fourth-biggest polluter, may risk failure after winners were selected without experience or proof that they can keep projects afloat earning low margins.
A woolen yarn maker, an animation company and an industrial pipes supplier with no experience building power plants were among 37 winners of the government auction announced Dec. 13. The lowest bidders quoted prices that mean they may struggle to earn an attractive profit, said Bloomberg New Energy Finance analyst Bharat Bhushan.
“These projects aren’t going to get built,” Anmol Singh Jaggi, director of Gensol Consultants Pvt., which funds renewable energy projects, said in an interview. “I don’t see how they’ll get financed or get returns.”
India, which averages 300 sunny days a year, aims to generate 20 gigawatts of solar power by 2022, equivalent to 12 percent of its total electricity production today. A setback may delay solar’s development in Asia’s second-fastest growing major economy at a time when equipment makers, including Arizona-based First Solar Inc., face a potential supply glut and seek new markets as European countries slash solar subsidies.
The three largest projects went to companies experienced in building power plants: Lanco Infratech Ltd., KVK Energy Ventures Pvt. and Rajasthan Sun Technique, a unit of billionaire Anil Ambani’s Reliance Power Ltd. Abengoa SA, which has built plants in Spain and the U.S., and Acme Group, which is building a 10- megawatt solar thermal plant in India, were passed over.
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