Acme, Inox explore exit from renewable energy projects won at record low tariffs

New Delhi: Acme Group and Inox Group that bid the country’s lowest solar and wind tariffs respectively this year now plan to exit the projects, said several people aware of the development.

Inox Wind Infrastructure Services Ltd bid Rs3.46 per kilowatt-hour (kWh) to win a 250 megawatt (MW) wind power contract in a 1 gigawatt (GW) tender by state-run Solar Energy Corporation of India (SECI) in February. Acme Solar Holdings Pvt. Ltd placed a winning bid of Rs2.44 per kWh in May to set up 200MW capacity at the Bhadla solar park in Rajasthan in another auction also conducted by SECI.

The National Democratic Alliance (NDA) government has set up an ambitious clean energy target of 175GW by 2022. Of this, 100GW is to come from solar projects and 60GW from wind.

“With Chinese solar module prices firming up, Acme is exploring an exit. Inox is also trying to exit with a sale condition precedent which involves the acquirer to use Inox Group’s wind turbines. These can be structured transactions,” said a person aware of the development requesting anonymity.

Rising prices of Chinese solar modules may arrest the sharp decline in Indian solar power tariffs and also put at risk projects that won licences betting on the continued decline in module prices, Mint reported on 19 July.

Any solar module price increase will impact the internal rate of return (IRR) with the power purchase agreements (PPAs) already being inked. Module prices account for nearly 60% of a solar power project’s total cost and are currently around $0.37 per watt.

The $3 billion Inox Group in March announced the sale of its operating wind power farm assets to Leap Green Energy Pvt. Ltd. Also, Russia’s Rosatom State Atomic Energy Corp. is exploring an investment in Inox Group’s wind turbine manufacturing business with a 1600MW capacity.

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