International funding agencies are putting their bets on India’s solar projects with companies such as Acme Solar, Azure Power and Welspun Renewables, among several others, attracting venture capital, project or debt funding.
In 2014, India saw investments of more than R2,000 crore in various solar projects compared to around R1,400 crore in the previous year, shows data compiled by Mercom Capital Group. The data is based on investments publicly disclosed.
While India saw a modest growth in investments in the solar sector, globally total corporate funding, encompassing venture capital and private equity, debt and public market financing, into the sector increased 175% in 2014 to $26.5 billion compared to $9.6 billion in 2013, says Mercom Capital Group, a global clean energy communications and consulting firm.
During October-December 2014, Acme Solar received R613-crore loan from the Asian Development Bank for developing 200 MW solar projects. On the other hand, Simpa Networks, a distributed energy solutions provider that lets customers purchase energy using a pay-as-you-go model, secured R25 crore in commercial debt financing from Overseas Private Investment Corporation (Opic) and GDF Suez.
In the third quarter of calendar year 2014, Azure Power, an independent solar power producer, through its India renewable energy arm Azure Clean Energy, secured a 15-year loan of R86 crore for a 40 MW solar project in Rajasthan from the International Finance Corporation (IFC), the private sector investment arm of the World Bank.
Similarly, in the second quarter of the year, Welspun Renewables Energy announced that the Asian Development Bank purchased a 25% stake in the company for $50 million, and DEG, the subsidiary of German government-owned development bank KfW, subscribed to the company’s compulsory convertible debentures valued at about $37 million, taking the total amount raised by the company to R527 crore.
In 2014, venture capitalists were also seen putting their funds into solar firms. Simpa Networks, a distributed energy solutions provider, raised R12.9 crore in VC funding. Another company, AK Surya PowerMagic, a provider of solar-based irrigation services for farmers, raised R3 crore in funding from Intellecap Impact Investment Network (Icube-N) and Infuse Ventures, IIM Ahmedabad’s clean-tech focused fund.
“The big story coming out of 2014 was the revival of capital markets—solar companies were able to access funding through multiple avenues like VC, public markets, IPOs and debt in record numbers, while the quest for lower cost of capital continued. The solar sector has come a long way from being perceived as a speculative, high-risk investment to attracting investors based on low-risk, attractive dividend yields”, said Raj Prabhu, chief executive officer of Mercom Capital Group.
Globally, nearly 119 VC investors were active in 2014, with 12 investors participating in more than one round in 2014. These include Acero Capital, Acumen Fund, DBL Investors, E.ON, Ecosystem Integrity Fund, Novus Energy Partners, Omidyar Network, SolarCity, Sustainable Development Technology Canada, Trident Capital, Vision Ridge Partners and Vulcan Capital.
Large-scale project funding announced in 2014 totalled $14.2 billion in 144 deals. The largest project funding deal announced in 2014 was the $942 million loan raised by China WindPower Group for a portfolio of projects totaling 800 MW. Top investors in large-scale projects were Mizuho Bank with 12 projects and Bank of Tokyo-Mitsubishi UFJ with 10 projects.