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Japanese internet and telecommunications giant SoftBank, led by billionaire Masayoshi Son, will be investing $20 billion for solar energy projects in India as it partners Bharti Enterprises of Sunil Mittal and Taiwanese manufacturing giant Foxconn. The mega deal on solar energy comes at a time when
Prime Minister Narendra Modi has sought a big push in the renewable energy space where current generation is less than one per cent of the total energy production.
SoftBank, which previously had announced a $10 billion push in India for various internet and telecom projects including gaining equities in high-energy start-ups, feels that solar holds immense potential in the country given the high level of sunlight and lower costs of construction of solar zones.
"India has two times the sunshine (of) Japan," Son, chief executive of SoftBank, said after announcing the joint venture plans on Monday. "The cost of construction of the solar park is half of Japan. Twice the sunshine, half the cost, that means four times the efficiency."
Mittal said that solar power holds immense potential. "Just as mobile phones have connected every Indian, renewable power has the potential to provide every Indian with access to electricity."
SoftBank, that has exposure in companies such as online retailer Snapdeal and taxi hailing company Ola, will be leading the three-way joint venture - SBG Cleantech -- with a controlling stake while Bharti and Foxconn will have "significant minority" stakes.
Son and Mittal, who also met Modi and some other Ministers earlier in the day, did not elaborate on the exact equity structure or immediate investment decisions. However, they said that Japanese banks and financial institutions are ready to back the venture favourably, and Mittal added that debt will be a key component of the overall project costs.
The companies said that the pace of the project will depend on the support the solar energy projects receive from various state governments as well as the Centre.
India currently produces about 4 gigawatts of solar energy and Modi has set a target to increase this to 100 gigawatts by 2020. SBG Cleantech plans to add 20 gigawatts in this effort, Son said.
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Most of the existing energy needs of the country are met through coal-based plants while other significant production comes from hydro, gas, and wind-based projects.
According to government estimates, solar can become the second-biggest source of energy, after coal, by the year 2022 if Modi's vision is achieved.
A look at global energy production shows that fossil fuels generate nearly 80% of the output while solar is only about 0.7%.
Son said that apart from catering to the huge needs in India, the joint venture can also look at supplies to other markets once production starts. SoftBank can bring its experience of the solar industry to India as in 2011 it had set up a unit -- SB Energy Corp. -- to develop clean energy projects in Japan following the Fukushima nuclear disaster.
SBG Cleantech will have Manoj Kohli, a trusted lieutenant of Mittal who until recently led Bharti's emerging businesses, as executive chairman.
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