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SoftBank plans $20 billion Indian solar power joint venture

Bloomberg

SoftBank Corp. will tie up with Bharti Enterprises Pvt. and Foxconn Technology Group in a $20 billion solar power venture in India, as the nation seeks to expand clean energy output about fivefold by 2022.

The project will aim to add 20 gigawatts of solar generating capacity, SoftBank’s billionaire founder Masayoshi Son said at a briefing in New Delhi on Monday. He spoke alongside Bharti’s Sunil Mittal, who said SoftBank will control the venture, with Bharti and Foxconn having minority stakes.

Indian Prime Minister Narendra Modi’s goal is for India to have 100 gigawatts of solar capacity to curb blackouts and pollution, up from 4.1 gigawatts now. The challenge is finding the $94 billion needed to pay for a clean-energy overhaul that reduces India’s reliance on dirty, coal-fired plants. Son’s venture, if successful, would account for a fifth of Modi’s objective.

“The question is whether Japanese investors can get comfortable with the Indian market, where local companies have been bidding extremely aggressively in tenders, and there are risks around land ownership and transmission build that may not be what SoftBank is used to in Japan,” said Vandana Gombar of Bloomberg New Energy Finance in New Delhi. Still, “there is no shortage of opportunity in India.”

SoftBank shares have gained 2.7 percent this year, compared with the 18 percent gain for the Nikkei 225 stock average.

Son said he will aim to invest $20 billion over the next decade, with the pace depending on the cooperation he receives from India’s central and state governments.

India has two times more sunshine than Japan, with construction costs for solar parks half those of Japan, Son said. “Twice the sunshine, half the cost; that means four times more efficient,” Son said. “So it makes a lot of sense to create large-scale solar power generation.”

The new venture will look at potential sites in Rajasthan and Andhra Pradesh states, Mittal said. It also will aim to manufacture solar panels in India.

The intention is to start the first project in 1 to 1½ years, Mittal said.

“Finding good projects is a challenge for every developer, and spending $20 billion on good projects may not be easy,” Gombar said.

Son said SoftBank can bring its experience of the solar industry in Japan to India, adding the company has invested $1 billion in Asia’s third-largest economy in the past nine months.

Japan is the second-largest market for solar cells, after China. India ranks fifth.

Modi’s solar ambition encompasses both rooftop projects and utility-scale plants. Adani Enterprises Ltd., Reliance Power Ltd. and SunEdison Inc. are among those pledging investment. Trina Solar Ltd. said last week that it plans a $500 million solar plant with India’s Welspun Energy Ltd.

Telecommunications company SoftBank set up a unit in 2011, SB Energy Corp., to develop clean energy projects following the Fukushima nuclear disaster in Japan the same year.

Mittal’s Bharti Airtel Ltd. is India’s biggest wireless provider. SoftBank has stakes in more than 1,000 companies, including an Indian chat application venture with Bharti.

The largest member of Terry Gou’s Taiwanese group Foxconn is Hon Hai Precision Industry Co., maker of Apple Inc. iPhones.

A gigawatt, or one thousand megawatts, is about the amount of power produced by one nuclear reactor.