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Solar investments are red hot

Workers clean solar concentrator panels at the Tapi solar food processing unit at Kapodra village near Ahmedabad. REUTERS

olar power projects in Gujarat and Rajasthan have become a preferred, risk-free and high return investment option for high net worth individuals and corporate houses keen to park their funds in short to medium term.

Bollywood actor Ajay Devgan leads the list of individual investors who have started opting for either setting up of solar power plants or investing in rooftop solutions. Devgan has invested in a 25 MW power plant being set up in the solar farm developed by the Gujarat government.

In Gujarat alone, for example, as many as 84 companies, have signed agreement with the state government for setting up solar plants of a combined capacity of 968 MW, while 400 firms have registered themselves for setting up units. With the economic climate worsening, individual investors and companies with surplus cash are unwilling to put their money in conventional asset classes such as equities, real estate or in expanding their existing businesses in the country. With banks now lending money to solar projects, the projects now offer that rare blend of relative safety and high returns in the medium term.

Speaking to this newspaper, Rajubhai Patel, chairman of Rajesh Power Services, which has set up a plant of 1 MW, with an investment of Rs 10 cr, said, "We were into trading of electrical equipment and contract works. But seeing potential in solar power sector, we decided to go for it. And the project is running fine. We are planning to expand further." He said many other businessmen are also exploring similar options in Rajasthan.

Solar power investments are a risk free opportunity. With new technology coming in, the capital investment required to set up power plants is fast coming down. It is estimated that the per unit cost of solar power will be the same as power from coal by 2015.

Pranay Patel, who owns Som Shiva (Impex), primarily a plastics business, has also decided to put in some surplus cash into solar power. "But of late we have decided to step into solar power sector. And the experience is good. Our 1 MW plant at Surendra Nagar is operational. We may also go for an expansion soon," said a company official.

Manjul Rangwala is another such businessman whose firm, Harsha Engineers, is setting up 1 MW plant in Gujarat. Other companies which are setting up set up solar plants include EI Technologies, MBH Power, MBH Power (all for 1 MW), Universal Solar System, Saumya Construction, Claris Life science Ltd (for 2 MW).

Gujarat is not alone. In Bihar, at least 10 promoters have submitted their proposals to set up units of a total of 198 MW of solar power. Rajasthan is also turning out to be a good investment option for these entrepreneurs. Other states like MP and Chhattisgarh are also attracting businessmen into the sector.

Jyotindrabhai Patel, chairman of energy committee of Gujarat Chamber of Commerce and Industries, said, "We are getting queries from many high net worth individuals who are willing to invest in this sector, either individually or in joint venture."

Meanwhile, Dhruv Sharma of Indian Solar Manufacturers Association also confirmed that the sector is attracting many entrepreneurs, who see this sector as an attractive investment opportunity. "One just needs about Rs 2.5 cr for setting up a solar plant of 200 KW," he said. Sharma added that more such people will put in their money as government is coming out with retail rooftop policy in Delhi and Chennai, wherein any entrepreneur can set up a power unit with a small investment, even in a few lakhs.

According to Shubhra Mohanka, director of Solid Solar, rooftop solar is turning out to be good investment option. "There are no issues of land acquisition. Moreover, there are lesser transmission & distribution losses. Also, this is a more decentralized solution of power," she said. Mohanka said, besides giving incentives to big power plants, the government should come out with the retail rooftop policy at the earliest.

At present the country produces 400 MW power from solar plants. However, with the rapid expansion, the capacity is expected to go upto 1,000 MW by end of the current fiscal.

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