This week has been interesting for the contrasting announcements coming out of China and India. While GoodWe, a major solar inverter maker from China had its successful IPO in Shanghai, in India, Petronas Owned Amplus brought 100MW of assets from ACME Solar, and the biggies, GreenKo Group is about to get a $980 million investment from Japan's Orix,
Capital. Or the lack of it, has plagued sectors India for as long as one can remember. In sector after sector, successful Indian firms have been lauded for their capital efficiency, with little understanding at times, of the fact that they didn’t have any other choice.
Today, when we look at the top 3 renewable energy developers in the country, namely Adani Green Energy, Greenko Group, and Renew Power, its interesting to see the level of foreign stakes, and backing, they have all needed to reach their GW sized ambitions.
While Adani has a deal with Total of France for a 50 percent share for the latter, global investment major Goldman Sachs has a 48 percent stake in Renew Power. As and when it lowers its stake, you can be sure that the buyer will be yet another foreign player.
Greenko Group, where the $980 million deal with Japan’s Orix was announced today, is another level altogether. After the deal, the firm’s promoters will have a 13 percent stake, with the GIC Investment trust of Singapore holding 55 percent, the Abu Dhabu Investment Trust (ADIA) around 12 percent , and new backer Orix, close to 20 percent.
This foreign interest in India’s renewable energy sector, while a strong indicator of the tremendous progress hat has been made in the past few years also points to a challenge at home. The lack of funding scale, and time, that is needed to support this new sector.
Even new kid on the block, Amplus Energy, that was brought over by Malaysia’s Petronas last year completely, had raised growth capital from private equity fund I Squared Capital, back in 2015 at the cost of a majority stake in the firm.
Contrast this with a veritable line up of Chinese firms that are publicly listed, in one of the many exchanges in China, Hong Kong, or even the US. These firms like Longi Solar, Jinko solar, Xinyi Solar, Solis, GoodWe, Sungrow, Tongwei and more cover the full spectrum of solar manufacturing, be it modules, cells, inverters, and finally, developers.
The access to public markets markets, has done more than possible anything else, to provide the impetus these firms needed, to grow globally. The transparency a public listing entails, along with the benchmarking with competition, has only benefited these firms. In contrast, the few firms from the sector to have gone for a listing in India are either on the developer side (Adani Green, Azure) or EPC (Sterling and Wilson Solar).
For India to make progress with its solar manufacturing sector, it needs to create conditions and an enabling environment that can give its manufacturers access to capital to think big, at scale. Otherwise, be prepared to face regular calls for protection from imports, and slow progress on both the technology and quality front.