Lightsource and UK Climate Investments Establish Partnership to Fund Indian Solar Projects
Lightsource Renewable Energy and UK Climate Investments, part of the Green Investment Group within Macquarie Infrastructure and Real Assets (MIRA), have entered an agreement to form a partnership platform to fund the development, acquisition, and ownership of large scale solar power generation assets in India.
UK Climate Investments and Lightsource will jointly target the greenfield development and acquisition of operational utility scale solar assets in India with the shared ambition of seeding a platform that can create high-quality de-risked investment opportunities in one of the world’s fastest growing solar markets. It will mobilize the large-scale deployment of institutional capital through Lightsource.
The seed asset for the partnership will be Lightsource’s 60 MW (DC) project in the Indian state of Maharashtra, which reaches financial close simultaneously with this announcement. Participating in a competitive tender process in 2016, Lightsource secured the project in a 450 MW tender by Solar Energy Corporation India (SECI).
According to Mercom’s India Solar Project Tracker, Lightsource won the project by quoting a VGF of ₹1.96 million (~$30,142) along with the fixed tariff of ₹4.43 (~$0.068)/kWh under NSM Phase-II, Batch 4 VGF program.
While UK Climate Investments will provide 49 percent of the equity for the construction of the first project, it has earmarked up to GBP30 million (~$39.5 million) in aggregate for this project and for a broader partnership with Lightsource to develop and construct up to a total of 300 MW of solar PV projects. Third party funding and commercial project finance debt will support the initial and subsequent projects.
This equity investment is the first by the joint venture, which uses official development assistance from the International Climate Fund to leverage private investment into low carbon projects in India and Africa. As part of the agreement, Lightsource will provide operations and asset management services for the platform in the long-term; building on the company’s experience providing these services in Europe.
Nick Boyle, CEO Lightsource said, “The UK Climate Investments partnership, and our first Indian project reaching financial close, are significant milestones in the growth of Lightsource. This project is a testament to the strength of the team we have in India, supported by a global project finance and operational capability, that have made this project a success. UK Climate Investments are a fantastic partner for us to seed the foundations of a large solar and smart energy investment and operating platform in India.”
Martin Stanley, Global Head, Macquarie Infrastructure and Real Assets commented, “This first investment for UK Climate Investments will provide the necessary sponsor support for the first project in a very promising series of potential solar investments in India, in line with UKCI’s investment mandate. Working with the UK’s leading solar developer, we will look to stimulate a positive transformational impact by bringing industry-leading best practices of risk mitigation and management to the local market.”
According to recently released Mercom’s Q3 2017 Solar Funding and M&A Report, announced large-scale project funding in 9M 2017 crossed the $10 billion mark, with $10.2 billion raised for the development of 117 projects. For the third quarter of 2017 alone, announced large-scale project funding came in at more than $2.8 billion in 36 deals.
Image credit: Lightsource