Clean Power

Published on May 4th, 2014 | by Mridul Chadha


GE Invests $24 Million In India’s Largest Solar Power Plant

May 4th, 2014 by  

Welspun Madhya Pradesh Solar Project

Welspun Energy’s 151 MW solar PV project in Madhya Pradesh, India | Credit: Welspun Energy

General Electric has announced its first major investment in the Indian solar energy sector. The beneficiary is the largest operational solar power plant in India.

The American major has invested $24 million in 151 MW solar photovoltaic power project owned by Welspun Energy. The plant was commissioned in February this year in Madhya Pradesh under the state’s solar power policy.

The cost of the project was almost US$200 million (₹1,185 crore). Welspun Energy acquired debt financing worth about US$150 million for the project. The company will use the equity infusion by General Electric to pay off a portion of this debt.

Welspun Energy had secured the tender for the project through a reverse auction organized by the Madhya Pradesh government. The company offered to set up the project seeking a tariff of US$0.14 per kWh. At this rate, the project is expected to bring in annual revenue of about US$35 million every year.

According to reports, with this investment General Electric’s global investment in renewable energy has crossed US$10 billion.

Being one of the leading solar power developers in India it is hardly surprising that Welspun Energy has attracted such substantial equity infusion from global leader like General Electric.

Welspun Energy has an installed solar power capacity of just over 300 MW or about 10% of the entire Indian solar power capacity. The company has secured several solar power projects under the central government’s National Solar Mission as well as state solar power policies. India recently announced a target to increase solar power capacity addition target to 1,000 MW in 2014.

The direct equity infusion in a power plant in a project may point towards an increased confidence in the Indian solar energy sector as, up until now, PE infusion has been witnessed majorly in wind energy and, to certain extent, biomass energy sector.

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About the Author

currently works as Head-News & Data at Climate Connect Limited, a market research and analytics firm in the renewable energy and carbon markets domain. He earned his Master’s in Technology degree from The Energy & Resources Institute in Renewable Energy Engineering and Management. He also has a bachelor’s degree in Environmental Engineering. Mridul has a keen interest in renewable energy sector in India and emerging carbon markets like China and Australia.

  • GE is getting big money from the people of India to build these things, instead of that money going to the people.

    • ReduceGHGs

      GE incurs costs, Indian people will benefit from their expenditures, the investor should be rewarded in profits…. unless you can think of system more efficient than capitalism? And lets not forget that we all benefit by India NOT building coal fired electrical generators instead.

      • LookingForward

        Well, one thing I have to say about capitalism, How much “reward in profit” should the investor get?
        The problem with the way capitalism is run, is that the profit can be endless as long as the product keeps getting sold (in this case free electricity from solar).
        In a perfect world there would be rules about how much profit can be made by an invester from a product that people need. (talking net profit, an invester should allways get paid to produce that product).
        I think this should be so for all products that people need (internet, medical products, electricity, education, food, water etc.), let an invester make a certain percentage of profit say 50% or 100% and then produce the product for the cost to create the product.
        But that would be to close to utopia…

        • ReduceGHGs

          The problem with production at cost is that there’s no incentive to do it. Perhaps after ample profits and recapture of capital then essential products should convert to public ownership. An interesting concept. Don’t know if it would work or if it’s been tried.

          Certainly capitalism run a muck, unregulated, can be destructive in the long run. We see that with climate change. We The People need a larger voice in the market so that our future generations’ interests aren’t sacrificed for the sake of short-sited greed.

          • LookingForward

            I think it can work.
            People will allways need jobs and doing a job to help the public is a lot more satisfying then some deadend job.
            The only problem is, there is no way a non profit organisation can buy a profit making product from some compagny.
            But that’s what the government should be for.

          • ReduceGHGs

            Almost everything has a price. For-profit enterprises/products can be valued based on the present value of expected income streams and other value measures. If the purchase price offered is higher than the calculated present value price, they’ll usually sell.

            But I agree. Some sectors of our economy, our society, should be held in public ownership. Some people don’t agree but I think for the sake of our long-term safety/prosperity it’s either more regulation or public ownership. Unbridled capitalism comes with some risks we should avoid. Climate change is probably the most dangerous.

            Have a good one!

    • Ronald Brakels

      Josh, GE didn’t get money to build the solar farm. It is buying part ownership of the solar farm after it has been built. Now GE could have decided to just give the money to the Indian people instead, but they didn’t. They’re kind of stingy like that. And I’m afraid I am too. I have $2.40 but instead of giving it to the Indian people I am going to use it to buy some chocolate milk. But while it’s not giving away the money, being able to sell part of the project to a foreign company allows the Indian company to lower their borrowing costs which effectively lowers the cost of capital in India. And having a lower cost of capital does benefit Indians as it means the cost of investing in their economy is lower. It might not be as good as GE giving people money, but at least it’s something.

      • James

        @ronaldbrakels:disqus Why should GE give the money to people of India. Neither India has asked for it nor they would want to. The way I see this deal is it is purely financial in nature and that’s how it should be. Successful companies aren’t built if u keep giving away the money you have to charity. After all even they have to answer their shareholders.

        • Ronald Brakels

          James, they might give away money to the people of India because they are kind and generous people. Wells Fargo gave away over $300 million to Americans in 2012 which is more than 12 times what GE spent on purchasing part of this solar farm. Of course Wells Fargo is more than twice as large as puny little GE whose revenue last year wasn’t much more than the GDP of New Zealand.

          • Ronald Brakels

            PS: General Electric – Please give me some money.

            I just thought I would cover myself there in case the whole asking for and wanting it thing was important. But I’m more likely to benefit from big company charity indirectly than directly. Say GE funds the development of a vaccine for dengue fever. I would still want to use that vaccine if I was travelling to an area with dengue fever even if I’d never asked for or previously wanted it. But asking and wanting might be important, so I’ll take advantage of this public forum to say:

            Dear people running corporations,

            I humbly beseach you (that means ask) and want you to give money to people. And I also ask and want you to give money to people in a way that will hopefully result in the most benefit to humanity per dollar given.

            Yours sincerely

            Ronald Brakels

  • Ronald Brakels

    If the solar farm brings in $35 milliion a year that’s about a 17% return. That might seem really high to us developed world putzes, but that’s around what’s required to get a project built in India. Indian interest rates are currently 8% while in most developed countries they are not much higher than zero. The good news is, as India becomes more developed and their interest rates fall, the effective cost of solar power will become even lower and the relative cost of coal and gas power will become even higher.

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