SoftBank has finally ended months of speculation about its future in India’s renewable energy market.
SoftBank has sold its 80% stake in a joint venture platform, SB Energy, to Canadian Pension Plan Investment Board (CPPIB). Indian telecom giant Bharti Enterprises owns 20% in the venture and has decided to stay put in the business.
According to media reports, SB Energy has been struggling to raise capital to execute solar and wind energy projects that it had secured in competitive auctions. The last major project that the company had secured was 600 megawatts in a 2 gigawatt auction conducted by NHPC earlier this year.
SoftBank had entered the Indian renewable energy in 2015 with ambitious plans to set up 20 gigawatts of renewable energy capacity with an investment of $20 billion. But like several other renewable energy developers in India, SB Energy’s plans also ran into trouble.
Increasing competition, lengthy delays in payments by distribution utilities, and regulatory delays in adoption of tariffs severely affected developers’ capability to execute new projects.
Several established developers like Azure Power, ReNew Power, and Acme Solar either sold operational assets or equity stakes to raise funds. Many companies that operated solar and wind energy projects as non-core business also sold off their assets.
The onset of the COVID pandemic further aggravated the financial condition of project developers. A sharp decline in economic activity and power demand meant that distribution utilities were hesitant to sign new power purchase agreements. According to media reports, the government has so far failed to find buyers for 18 gigawatts of solar power capacity it contracted in recent auctions.