Finnish state-run utility Fortum Oyj’s India unit, which last year drove down solar power tariff to a new low, will set up at least 250 megawatts (MW) of solar capacity in the country every year, managing director Sanjay Aggarwal said.
The local unit of Fortum will also enter the waste-to-energy sector and launch charging stations for electric vehicles to gain a larger hold in India’s renewable energy sector, Aggarwal said.
Exactly a year ago, Fortum said it would invest €200-400 million (Rs1,500-3,000 crore) in India’s solar energy sector to set up some large-scale greenfield projects. The company will have about 200MW of solar energy capacity operational by August. It has a target of achieving 1GW of solar capacity in the next few years.
The company plans to set up its solar projects across utility plants, business-to-business, and rooftop projects, Aggarwal said.
“We will keep on bidding for new projects and our appetite would be to add about 250MW every year,” Aggarwal said.
“In India, we are looking at four pillars: the first would remain solar, second would be the bio-ethanol plant, we want the third to be in waste to energy, and fourth, we want to launch charging stations for e-vehicles. But the engine of Fortum India will be solar.”
The company’s bid for a solar project in a Rajasthan auction last year drove tariffs to a low of Rs4.34 per kilowatt-hour. Solar tariffs have this year fallen to a record-low of Rs3.30 a unit on a levelized basis—i.e., a value financially equivalent to the tariffs over the period of the power purchase agreement.
The parent had last year bought a majority stake in a company called Chempolis Ltd, which has a memorandum of understanding with Numaligarh refinery for putting up a bioethanol plant. The plant would collect bamboo from across Assam, Nagaland, Mizoram and Manipur and convert the cellulose to ethanol, which would then be blended with petroleum products.
“There are no success stories in India so far in waste-to-energy, a bedrock of Fortum in the Nordics… We would like to position ourselves in the space and also use the dominant position in the Nordics with respect to charging stations for e-vehicles,” he said.
Fortum opened its India office in September 2012 and acquired a 5MW solar power plant in Rajasthan in 2013. In 2015, its 10MW solar photovoltaic plant was commissioned under the Jawaharlal Nehru National Solar Mission.
In January 2016, Fortum won an auction for a 70MW project in Rajasthan and three months later won another for 100MW in Karnataka. By August, the company will have 200MW of operational solar power capacity in India, Aggarwal said.
Aggarwal said his unit continues to look at merger and acquisition opportunities in renewables.
Average solar tariffs in India have fallen by about 73% since 2010, almost in line with Chinese spot prices for solar power modules, which have also fallen by about 80% in the same period, Mercom Capital Group said in a report last month.
Intense competition in reverse auctions for solar projects due to limited supply of projects has pushed companies to bid lower, sacrificing margins, in order to gain market share, the report said.