Heating up fast

If you look through the eyes of Anil Sardana and Piyush Goyal, things look quite sunny — literally. While the former as the honcho of Tata Power has presided over the country’s biggest buyout in the renewables space – the #9,000 plus crore deal buying out Welspun Energy, the latter as the power minister believes we are going to end up with 100GW of solar power by 2022 from the current 7GW. 

Solar energy is suddenly the next big thing in the renewables space. Even as state-owned lenders are grappling with restructured loans and write-offs in the power sector, the interest around solar power seems to be growing with each passing morning. The money chasing this dream is no mean change – state-owned banks alone have committed close to #200,000 crore to finance renewables.

One key trigger for the solar boom is the steep fall in photovoltaic cell prices, thanks to China. As PV panels account for 60% of the  cost, suddenly these projects look attractive. Quite a few bids now have seen tariffs being quoted at #4.6/4.8 per unit compared with over #5 a unit for coal-based power. 

Could this aggression be misplaced? Here is the conundrum – while this boom is triggered by cheap equity and abundant debt, apart from falling panel costs, the final fate of these projects will depend on whether the state electricity boards — which are merrily signing these agreements to buy power — will be able to pay their bills, and more importantly whether they will honour the committed off-take. This issue’s cover story takes a look at whether the sunny days are here to stay, or it’s yet another disaster in the making. 

In other stories, we have a feature on Walt Disney India. Despite its global dominance, it has not been making money hand over fist as one would have expected. A series of misadventures in film financing and some strategic calls have spread enough red on its balance sheet. The saving grace is its distribution business which continues to do well. Then there is a cursory take on the HDFC-Max Life merger.  Deals rarely make for a win-win, but in this case it meets the objectives of the parties perfectly well.