As India takes the initiative to create a global solar industry alliance, investments in the solar energy sector in the country rose to over $10 billion in 2017. The figure was about $4 billion a year ago. According to the Annual India Solar Market Update report released by Mercom Capital Group, project financing in 2017 rose to about $6.4 billion on the back of 9.6 GW in solar installations, compared to $3.5 billion and 4 GW in 2016.
Corporate funding (VC/PE, public market and debt) raised by Indian solar companies in 2017 totaled $3.6 billion and accounted for 28 percent of the global total. In terms of venture capital and private equity investments, Indian companies raised over $800 million and accounted for 50 percent of the global aggregate.
The rise in corporate funding in 2017 was driven by large private equity deals. For instance, ReNew Power closed two deals worth $200 million each. Other major deals worth more than $100 million featured companies like Greenko Energy, Hero Future Energies and CleanMax Solar.
Debt financing was another area that saw significant year over year growth, said the report. Most of the debt activity among Indian solar companies came in the form of new bonds. Greenko Energy issued senior notes and bonds to the tune of $1.5 billion, Azure Power raised over $500 million through a bond and ReNew Power raised close to $500 million via bond issues. The debt instruments used to raise financing in 2017 were numerous and included senior notes, bonds, non-convertible debentures and a flexi-line of credit. Interest rates for various instruments ranged from 4.9 percent to 8.75 percent.
The report noted that there were no corporate M&A deals in solar during 2017. Project acquisition activity fell by half -- in terms of dollars -- compared with 2016. The largest project acquisition deals included the $600 million acquisition of Hindustan Power Projects' 330 MW solar portfolio by the Macquarie Group and the $300 million acquisition of First Solar's 190 MW project portfolio by IDFC Alternatives. By comparison, 2016 acquisition activity was dominated by the $1.4 billion purchase of Welspun Renewable Energy's 1.1 GW project pipeline by Tata Power Renewable Energy.