India – the world’s biggest solar opportunity?

Guest blog by Ram Nandakumar, CEO, Armstrong Energy Global 


Ram will be speaking at ‘India – The best solar investment opportunity in the world today?’ – a roundtable discussion in London organised by the London Environmental Investment Forum on June 30th. For details, see

At Armstrong Energy Global (AEG), a London-based solar power developer and operator, we now have 6 MW solar PV built and operating in India, which we are planning to increase to around 100 MW by the end of 2015, and with an aspiration of 1,000 MW by 2018.

We strongly believe in a market-based, non-subsidy driven model for solar. So when we set out three years ago to identify markets outside the UK (our home market, which is subsidy-driven), we wanted to identify markets where solar could be commercially viable without subsidy. This would mean pricing set by commercial factors, which should result in less government intervention, no burden on tax payers and thus opening up a significant chunk of the market. In these circumstances, we would have the foundation for the large scale deployment of solar assets.

I was born in Tamil Nadu, but spent most of my time growing up in Andhra Pradesh, where my parents and other family members still live. Given this, and Armstrong’s strong business links in India, we explored India for solar. Having spent around 18 months studying the market and carrying out thorough legal and tax due diligence, we came to the conclusion India was ideally suited for solar power generation, even without a subsidy [i].

The main advantages we identified in India were:

  1. A current power shortage in the country so there is a strong need for the quick addition of generation capacity.
  2. A strong match between solar power generation in India and a significant portion of the intraday power demand profile. This results in solar being a much more cost effective solution in comparison to the UK, where solar generation peaks during the summer months, when the demand is much lower.
  3. An excellent and widely distributed grid infrastructure, with substantial readily available capacity for addition of solar assets (contrary to the general perception in the West). This allows for solar generation to be added close to consumption centres, resulting in lower losses and much lower project completion time. These factors result in solar power being a cost effective part of the grid’s power generation portfolio and a natural fit with existing infrastructure (both generation and distribution).

Despite all the positives we have identified about the opportunity for solar in India, setting up a new business is always fraught with various risks and difficulties. This is only made much harder given the cultural differences of doing business in any new country and India is no different. With our realistic view of this risk, we decided to start small so we could gain valuable experience and expertise in the new market. So initially we developed a 1 MW project in in the town of Rajahmundry (Andhra Pradesh). As expected, we had significant learning from this project. The key learning was around compliance with various policies. This was due to the sector being new, and both us and the various government departments having to learn as we went. As result of this, the project was delayed by around 6 months, but none of the issues were significant and most of them where one-offs.

With the learning from this project, we then decided to scale up our operation and built a 5 MW plant near Hyderabad. This plant was completed in record time at a cost of £600,000 per MW. We have a contracted annual output of more than 8.5 million kWh per year (over the full 5 MW), which is sufficient to power roughly 10,000 homes in India.

Although we had very few staff on the ground while we worked on our first project, by the time we started work on our second project, our confidence in the Indian market was very high. So in parallel to the second project, we started building a strong team capable of developing and managing much larger projects. The main aims of the expanded team were:

  1. Develop robust business platforms for accounting, reporting, project management, to have strong corporate governance in par with our UK operation.
  2. Identify and secure projects for our pipeline, and
  3. Have all key competencies necessary such as, technical, legal, commercial (in addition to normal functions such as accounts) within the team. This has proved to be a key advantage in the market. We have been able to rapidly develop our pipeline of projects, identify key risks to the projects and mitigate them before it is too late, while also ensuring we have a lean model for development of projects.

With the base we have developed, our focus now is to develop and commission around 100 MW of solar assets in the ground before the end of 2015. We are currently completing a £10m capital-raise for this next phase, having raised just over £5m to fund our development so far. With the strong team we have in the country and the excellent network we have, we are confident we will only deliver this but also identify much more projects for the next phase of investment.

Our aspiration is to be operating 1 GW of solar power plants in India by 2018. This will require us raising tens of millions in capital. We have a supportive investor base, which we are growing. We are in active discussion with several sources of capital, including the AIM market of the London Stock Exchange, where we have appointed the investment bank Cantor Fitzgerald to advise us. And we have every confidence that investors will share our enthusiasm for this investment opportunity.

[i] Although there are no direct solar subsidies in India, the export of solar electricity does benefit from not having to pay some of the grid costs that thermal power plants incur. Furthermore, the FT reported on January 17th – ‘India courts solar investors with dollar contracts plan’ – that the Indian government is considering  a plan to attract foreign investors with solar supply contracts denominated in dollars rather than rupees.

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