GE Invests $24 Million In India’s Largest Solar Power Plant

May 5, 2014 by  
Filed under Green Energy News

Clean Power
Welspun Madhya Pradesh Solar Project

Published on May 4th, 2014
by Mridul Chadha


Welspun Madhya Pradesh Solar Project

Welspun Energy’s 151 MW solar PV project in Madhya Pradesh, India | Credit: Welspun Energy

General Electric has announced its first major investment in the Indian solar energy sector. The beneficiary is the largest operational solar power plant in India.

The American major has invested $24 million in 151 MW solar photovoltaic power project owned by Welspun Energy. The plant was commissioned in February this year in Madhya Pradesh under the state’s solar power policy.

The cost of the project was almost US$200 million (₹1,185 crore). Welspun Energy acquired debt financing worth about US$150 million for the project. The company will use the equity infusion by General Electric to pay off a portion of this debt.

Welspun Energy had secured the tender for the project through a reverse auction organized by the Madhya Pradesh government. The company offered to set up the project seeking a tariff of US$0.14 per kWh. At this rate, the project is expected to bring in annual revenue of about US$35 million every year.

According to reports, with this investment General Electric’s global investment in renewable energy has crossed US$10 billion.

Being one of the leading solar power developers in India it is hardly surprising that Welspun Energy has attracted such substantial equity infusion from global leader like General Electric.

Welspun Energy has an installed solar power capacity of just over 300 MW or about 10% of the entire Indian solar power capacity. The company has secured several solar power projects under the central government’s National Solar Mission as well as state solar power policies. India recently announced a target to increase solar power capacity addition target to 1,000 MW in 2014.

The direct equity infusion in a power plant in a project may point towards an increased confidence in the Indian solar energy sector as, up until now, PE infusion has been witnessed majorly in wind energy and, to certain extent, biomass energy sector.

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About the Author

currently works as Head-News Data at Climate Connect Limited, a market research and analytics firm in the renewable energy and carbon markets domain. He earned his Master’s in Technology degree from The Energy Resources Institute in Renewable Energy Engineering and Management. He also has a bachelor’s degree in Environmental Engineering. Mridul has a keen interest in renewable energy sector in India and emerging carbon markets like China and Australia.

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  • GE is getting big money from the people of India to build these things, instead of that money going to the people.

    • GE incurs costs, Indian people will benefit from their expenditures, the investor should be rewarded in profits…. unless you can think of system more efficient than capitalism? And lets not forget that we all benefit by India NOT building coal fired electrical generators instead.

      • Well, one thing I have to say about capitalism, How much “reward in profit” should the investor get?
        The problem with the way capitalism is run, is that the profit can be endless as long as the product keeps getting sold (in this case free electricity from solar).
        In a perfect world there would be rules about how much profit can be made by an invester from a product that people need. (talking net profit, an invester should allways get paid to produce that product).
        I think this should be so for all products that people need (internet, medical products, electricity, education, food, water etc.), let an invester make a certain percentage of profit say 50% or 100% and then produce the product for the cost to create the product.
        But that would be to close to utopia…

    • Josh, GE didn’t get money to build the solar farm. It is buying part ownership of the solar farm after it has been built. Now GE could have decided to just give the money to the Indian people instead, but they didn’t. They’re kind of stingy like that. And I’m afraid I am too. I have $2.40 but instead of giving it to the Indian people I am going to use it to buy some chocolate milk. But while it’s not giving away the money, being able to sell part of the project to a foreign company allows the Indian company to lower their borrowing costs which effectively lowers the cost of capital in India. And having a lower cost of capital does benefit Indians as it means the cost of investing in their economy is lower. It might not be as good as GE giving people money, but at least it’s something.

  • If the solar farm brings in $35 milliion a year that’s about a 17% return. That might seem really high to us developed world putzes, but that’s around what’s required to get a project built in India. Indian interest rates are currently 8% while in most developed countries they are not much higher than zero. The good news is, as India becomes more developed and their interest rates fall, the effective cost of solar power will become even lower and the relative cost of coal and gas power will become even higher.

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