US-based First Solar, which has mainly operated as a project contractor in Indian solar power market so far, is now looking at a second business model based on development of solar power plants for subsequent sale to an equity investor or an independent power producer (IPP).
The world?s largest supplier of thin-film modules for solar plants has successfully applied this business model in the US market. Major equity players like GE Energy Financial Services and Mid-American Energy, a fund owned by Warren Buffett?s Berkshire Hathaway, have shown interest in picking up equity in projects being developed by First Solar. The company has developed as much as 2.7 giga watt solar generation capacity in the US with investment of $ 8 billion. ?We would develop plants and then sell them off to equity investors or IPPs. We will provide plant performance guarantee to the plant buyer,? said Sujoy Ghosh, India head, First Solar. The company holds $744 million in cash reserves and marketable securities.
Berkshire Hathway had recently purchased First Solar?s 550 mw AC plant in California. A bond issuance of $850 million conducted by the private equity major to finance the deal was oversubscribed by $400 million, according to industry watchers.
First Solar hopes that the proposed model will give a fillip to solar power capacity addition programme in India, which will in turn generate demand for its equipment. In India, the wind power equipment suppliers have successfully experimented with this model but the solar industry is yet to see such initiatives.
?We will bear project development risks. For example, we will do site election for project and also tie up funding. Operation and maintenance (O&M) services will also be provided by us when the plant becomes operational,? Ghosh added.