Chennai, India — Indian billionaire Anil Ambani’s Reliance Power Ltd. plans to build 6 gigawatts of solar farms in a northwestern state, the third major project announced in support of Prime Minister Narendra Modi’s renewable energy ambitions.
Reliance, based in Navi Mumbai, signed an agreement Thursday to develop the solar power projects over the next 10 years in Rajastan, according to an exchange filing. Financial terms weren’t disclosed.
Modi is targeting 100 gigawatts of solar capacity by about 2022 from the present installed capacity of about 3 gigawatts. He is hosting a renewable energy investor meeting in New Delhi from Feb. 15 to Feb. 17 and has already tapped investments from SunEdison Inc. and Adani Enterprises Ltd.
Reliance didn’t disclose the technology it will use or how it will fund the projects, which may require as much as $6 billion. The average cost of setting up 1 megawatt of solar power in India is 65 million rupees ($1.04 million), Bloomberg New Energy Finance estimates.
It also isn’t clear how Reliance will get paid for the electricity delivered from its projects, which would require grid links with local utilities that are struggling financially.
“Many Indian distribution companies have losses,” said Bharat Bhushan Agrawal, an analyst with Bloomberg New Energy Finance in New Delhi. “Their cost of power purchased from solar plants may still be higher than coal-fired plants. So getting reimbursed from financially weak distribution companies is a concern for financiers of renewable projects.”
In January, SunEdison said it will invest $4 billion to build the biggest solar panel factory in India. Construction on the photovoltaic plant will begin later this year, with an aim to deliver as much as 7.5 gigawatts of annual production capacity. On Feb. 9, Adani Enterprises Ltd., controlled by billionaire Gautam Adani, said it would build 10 gigawatts of solar power capacity.
Copyright 2015 Bloomberg
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