Hindustan Cleanenergy to invest Rs.5,500 crore on expansion

Aims at 1 GW of capacity by the end of 2016 and plans an IPO later this year

Leading solar power developer Hindustan Cleanenergy Ltd. (HCL) is aiming at 1 GW of capacity by the end of 2016, and is planning an initial public offer later this year to fund its expansion. At present the company has a capacity of 350 MW, which will increase to 500 MW by the end of this year.

HCL, a wholly-owned subsidiary of Hindustan Powerprojects Pvt. Ltd. (formerly known as Moser Baer Projects Pvt. Ltd.), will be investing Rs.5,500 crore in the next two years to fund its expansion plans.

The company has already invested a like sum in building its current capacity of 350 MW. “We are planning an IPO this year to fund our expansion,” Raja Wardhan Ghei, CEO-India Solar Business, Hindustan Cleanenergy, told visiting journalists at the company’s 30 MW solar farm in Gunthawada, Gujarat.

The cost of developing a solar project has fallen sharply in the last few years, thanks to falling prices for solar panels. “I expect it to fall by 5-6 per cent annually from Rs.7.5 crore per mega watt presently,” Mr. Ghei said in an answer to a question about the proportionately lower investment for expansion compared to what was spent for the current capacity.

HCL was among the first few entrants into the solar power sector and at present has revenue of Rs.550 crore with an operating margin of 99 per cent.

The company recently signed power purchase agreements (PPAs) with Punjab for two projects of 15 MW each and with Uttar Pradesh for a 20 MW project.

The Rs.468-crore Gunthawada project, commissioned in 2011, supplies to the Gujarat state utility at about Rs.15 a unit but newer projects are likely to earn lower tariffs due to competitive bidding. Mr. Ghei said that he expected parity between solar and thermal power tariffs by 2016 or 2017. While solar tariffs have been falling, thermal power tariffs have been rising, especially during peak hours and the gap now is not very large in certain parts of the country, according to Mr. Ghei.

Asked about the trade action by the United States on India over domestic sourcing norms, Mr. Ghei was of the opinion that the government was right in taking measures to protect the domestic industry. HCL has been sourcing panels from countries such as China, the U.S., Japan and Taiwan apart from within India.

Private equity firm Blackstone owns a significant minority stake in HCL’s parent, Hindustan Powerprojects.

(This correspondent was in Gunthawada at the invitation of the company)