Mumbai: Finnish state-run utility Fortum Corp has said it will invest anywhere between Rs 1,500 crore to Rs 3,000 crore in India’s burgeoning solar energy sector. This will be the clean energy company’s first international foray as part of its diversification plans.
According to the company, investing in India makes sense due to the abundance of solar resources and the sound government support to solar energy.
“Overall, Fortum is targeting a gigawatt-scale wind and solar portfolio. India is the first country Fortum has decided to enter, as the country offers one of the best solar resources and a sound government support for the development of the solar sector,” Forum said in a statement on Tuesday.
Fortum’s India plans include setting up some large-scale greenfield projects in India to enable economies of scale. It will also enter partnerships, or “other forms of cooperation, which would in the long term create a more asset-light structure,” Fortum said.
India has plans to ramp up its solar power production from the current levels of 5.25 GW to 100 GW by 2022. India gets 300 days of sunlight a year.
"Fortum seeks to allocate of its planned growth capital in the range of 200-400 million euros in solar projects in India," the statement said.
Companies win solar projects if they offer to supply electricity at the lowest tariff in competitive auctions. The last auction in January saw rates reach an historic low of Rs 4.34 per kilowatt-hour (or unit).
Besides Fortum, other foreign firms investing in solar power projects in India include SunEdison Inc of US, Canada's SkyPower Ltd, Japan's SoftBank Group Corp and a local unit of France's Solairedirect SA.
Projects in India are to be selected from various central, state and public sectors undertaking (PSU) schemes, which would guarantee a long-term power purchase agreement (PPA), taking into account Fortum's Group financial targets.
"With technologies rapidly maturing, utility competences are becoming increasingly important in solar business, and expansion in solar fits very well Fortum's vision to be the forerunner in clean energy. Overall, Fortum is targeting a gigawatt-scale wind and solar portfolio," the statement added.