India: secondary solar market emerging, says report

With six companies in the country now boasting 1 GW-plus pipelines, access to capital is rapidly becoming a key way for project developers to remain competitive.

Many companies are also selling off minority stakes in their operations, Bridge to India says, pointing to Canadian asset management firm Brookfield’s recently announced plans to purchase an undisclosed minority stake in New Delhi-based Azure Power for as much as 5 billion rupees ($74.6 million), as well as Greenko’s plans to buy SunEdison’s 1.3GW pipeline.

"In the face of falling bid tariffs, portfolio and minority stake sales instill much needed confidence in the market and help kick-start a secondary market for solar transactions," says the Gurgaon-based research firm. "Raising capital has become (an) urgent priority."

Such transactions underscore the gradual maturation of the Indian solar market, while Hyderabad-based Greenko decision last week to offer $500 million of green bonds — the first such high-yield issuance in the country — point to the emergence of new financing channels.

SunEdison’s recent bankruptcy has ratcheted up fears about the availability of capital in the Indian solar industry, but equity stake sales by companies such as Azure Power and Acme Power are helping to shore up market sentiment.

"These transactions show the fast maturing of the sector and (a) widening of interest from the international community," Bridge to India says. "(But) tariff and return expectations need to improve to more reasonable levels to provide appropriate risk-adjusted returns to investors."