‘DEPRECIATING RUPEE CREATING DIFFICULTY FOR INDIAN SOLAR PROJECT BALANCE SHEETS‘ SAYS NEW REPORT
BRIDGE TO INDIA, a solar market analysis and consulting firm, has revealed that Indian solar projects which have secured financing in foreign currencies are facing a negative impact on their balance sheets. This analysis is present as part of the ‘Financing’ section in the latest edition of their quarterly market analysis report – THE INDIA SOLAR COMPASS.
According to the July 2012 Edition of the India Solar Compass, the latest issue of BRIDGE TO INDIA’s quarterly Indian solar market analysis report, Indian solar projects that secured financing from non-Indian sources in US Dollars are likely to face a negative impact on their balance sheets owing to the recent record depreciation in the Indian rupee.
Factors like a high current account deficit, policy stagnation, low capital in-flows and strengthening of the US dollar in the wake of the Euro zone crisis have led to the depreciation of the Indian rupee by 24% since January 2011. According to BRIDGE TO INDIA’s analysis, the slide of the rupee to record lows will have a negative impact on the balance sheets of the developers that have relied on un-hedged or partly hedged overseas borrowing for projects under batch one of phase one of the NSM and projects under phase one and two of the Gujarat Solar Policy. The principal and interest payments are to be made in the currency of the loan and the revenue is in the weakening Indian rupee. This will nullify the cost advantage that Indian projects expected to enjoy by securing cheaper loans from non Indian sources.
According to the report, around 84MW of current PV installed capacity and 280MW of yet to be commissioned PV as well as CSP capacity is known to have secured project finance through international funding institutions. Another 150MW of capacity is in the pipeline for funding approvals. Project developers have relied on international financing sources like the US EXIM Bank, IFC, Asian Development Bank and Dutch Development Bank among other sources for cheaper financing of their solar projects. “The currency volatility in the last one year has also left many developers with projects under batch two of phase one of the NSM with confusion on the right hedging strategy for financing“, says Mohit Anand, Senior Consultant, BRIDGE TO INDIA. The report further details the hedging options that companies could use in the future in the face of a weak Indian currency.
About BRIDGE TO INDIA:
BRIDGE TO INDIA is a consulting company with an entrepreneurial approach based in New Delhi, Munich and Hamburg. Founded in 2008, the company focuses on renewable energy technologies in the Indian market. BRIDGE TO INDIA offers market intelligence, strategic consulting and project development services to Indian and international investors, companies and institutions. Through customized solutions for its clients, BRIDGE TO INDIA contributes to a sustainable world by implementing the latest technological and systemic innovations where their impact is the highest.
About INDIA SOLAR COMPASS
As part of their extensive research on the Indian solar market, BRIDGE TO INDIA produces the INDIA SOLAR COMPASS, a quarterly market analysis report. It provides key insight and analyses on the latest developments on policies, projects, manufacturing and finance in the Indian solar market. Subscribers include leading international component manufacturers, EPCs, project developers, investors, banks, insurance companies as well as public sector players and international organizations. To subscribe visit www.bridgetoindia.com/reports or call Mr. Mohit Anand on +91 (11) 46 08 15 79.
Contact: Mr. Mohit Anand
Phone: +91 (11) 46 08 15 79
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