IFC set to invest Rs 2,800 crore in MP Solar park

In one of the biggest deals in the renewable energy space, International Finance CorporationBSE -4.94 % (IFC), part of World Bank group, is close to investing $440 million or Rs 2,800 crore in Rewa Ultra Mega Solar Park in Madhya Pradesh.
The investment will be in the form of debt in three companies — Mahindra Renewables, Acme and Actis — that are setting up units in the solar park, a person close to IFC told ET. The 750 megawatt (MW) park has commitments from Mahindra Renewables, Acme and Actis.
“This investment by IFC will be in the form of debt in the three companies that are setting up the units, each of 250 MW,” a person in the know said.
The investment comes from a kitty put aside by IFC for India renewable energy investments. “IFC has put aside $1 billion including mobilisation, to renewable energy space in India,” said a person in know of the matter.
Proceeds of the investment by IFC will be used for the construction, operation and maintenance of the solar plant. The solar park, spread across 6.4 sq km in Rewa district of Madhya Pradesh, is set to start its operations by the year-end.
Industry experts say the past one year has seen consolidation in the renewable energy space and several global players have been aggressively looking at the space.
“Global investors including pension funds, sovereign wealth funds and infra-focused funds with longer term investment horizon have been actively investing in the Indian renewable sector of late and this trend will continue. Although reverse auction tariff regime has significantly impacted tariffs, we do expect global funds to back select platforms as they scale up –and also help them capitalise on consolidation opportunities in the current environment,” said Mohit Chopra, Deals Partner, PwC India.
IFC had earlier advised the Madhya Pradesh government in structuring the project. IFC had in August also extended a loan of $50 million to Arinsun Clean Energy to develop a 250 MW solar project in the Rewa Solar Park.
The huge demand push from the government through its programmes, reverse auctions and lowering costs of turbines and solar panels have contributed to significant reduction in price of electricity generated from renewables. In the latest auctions, power from wind and solar both have fallen below Rs 2.50 per unit, Aditya Gandhi, director, Sapient Global Markets wrote .
“India is on track to catalyse $200-300 billion of new investment in its renewable energy infrastructure in the next decade with global capital inflows playing an increasingly crucial role,” wrote Gandhi.