According to reports, Thierry Carcel, Chief Executive Officer of French company Fonroche, says he finds a solar tariff of Rs 8-9 a unit “too low” for satisfactory return on equity.
The company, through an equal joint venture with an Indian entity, won rights to set up a 20 MW solar photovoltaic project, through the bidding process of National Solar Mission, Phase I Batch II. The joint venture won the project, quoting a tariff of Rs 9.1 per kWhr. The first 5 MW of the project has just been commissioned, and the other 15 MW will be commissioned in a few days.
Carcel, who said that Fonroche was “not totally satisfied with the profits and financial conditions”, nevertheless felt that “it would be ridiculous for us not to be in India”, given the immense potential the country offers.
He said he was hopeful that things would get better. Solar equipment and financial costs will come down, he said. ”I don’t think Indian banks have understood solar well,” Carcel said, adding that once they did, and once companies like Fonroche established a track record in India, financing costs would come down.
The 20 MW project at Gajner, Rajasthan (near Bikaner), the first phase of which was inaugurated today, was built with a bridge loan from an Indian financier. PR Fonroche, the joint venture that owns the plant, is talking to a few Indian and foreign companies for funding to pay back the bridge loan. To secure the bridge loan, the project developers had to bring in more equity than they would have had to elsewhere.
While complimenting the Indian government’s National Solar Mission for putting through a transparent and quick process of discovery of feed-in tariff through a reverse bidding process, he said that it was very difficult in India to do the paper work, obtain land and get all the permits. “Many countries in the world do everything to attract foreign investors. India does not,” he said.
However, he said that once the formalities were over, the plant could be set up very quickly. The company completed the 20 MW plant in just four months. He praised Indians for the “culture of getting results”.
Carcel said that Fonroche had taken a step into India and aimed to be present here for the long term. The joint venture, PR Fonroche, intends to set up “minimum of 200 MW” of solar plants soon, and is mulling a solar park in Andhra Pradesh. He said that the company would participate in state tenders and also look at entering into bilateral deals with industrial consumers for supplying them power. Talks are on with two large industries, he said.