SunEdison is expected to continue its selling spree, as it looks to offload equity interest in a landmark solar power project in India.
According to media reports, SunEdison is planning to sell its equity stake in a 500 MW solar power project that it secured rights to develop in the state of Andhra Pradesh in India last year. The project, auctioned under the central government policy of National Solar Mission, will be the largest solar power project in India developed by a single company.
SunEdison secured the rights to develop the 500 MW project at a tariff of Rs 4.63/kWh. This was the first time in India, a company had secured a winning bid of lower than Rs 5.00/kWh (US¢7.7/kWh). The 500 MW auction was oversubscribed 10.5 times. A total of 30 prospective project developers submitted bids for a total of 5.5 GW capacity. Some of the foreign developers were among the first-time participants in an India solar power auction.
While subsequent auctions saw tariff bids slip to as low as Rs 4.34/kWh but several observers had questioned the low tariff bid by SunEdison. But company officials clarified that they were confident of seeing the project through. The fact that a state-owned company that also happens to be the largest power generation company in India will be buying power from the project has increased SunEdison’s confidence in the project. SunEdison believes that having NTPC Limited as part of the project will help it secure debt finance at 50 basis points lower than market norm.
Now, however, the company seems to have recalculated its risks, and following increasing strain in the balance sheet, which led it to sell several of its assets worldwide, SunEdison is looking to offload some equity stake in the project.
At current market conditions, the 500 MW project is expected to require a total investment of Rs 3,000 crore (US$450 million). As per tender rules, SunEdison can sell up to 49% stake in the project which could valued at around Rs 1,470 crore (US$220 million).
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