SunEdison Inc. (SUNE) is set to expand its base in India by installing a 159 kilowatts (kW) solar PV micro-grids project to provide electricity to 4,875 people in six villages. SunEdison will work with Rural Electrification Corporation, a Government of India organization, and the Madhya Pradesh Urja Vikas Nigam state agency.
Through its SunEdison Eradication of Darkness (SEED) initiative, SunEdison will begin the construction of the micro-grids with battery storage in Sep 2014. The construction is expected to be completed by December. This initiative will not only have a positive impact on the social lives of the people but also provide a clean and renewable source of power.
The company’s current move bodes well as in the recent 2014 budget, power generation though renewable sources was given high priority with the Indian Government allocating INR1,000 crore for the development of solar power plants and solar parks, per Economic Times. Moreover, per the report, India plans to commission 20,000 megawatts of solar power projects by 2022. Not only that, lower taxes will be levied on solar power gear makers which in turn will reduce the cost of solar power panels.
All these projections present SunEdison a huge opportunity to expand its base in the country. However, there is no dearth of competition from local solar power providers. Companies such as Adani Power, Reliance Power, Tata Power, NTPC and Torrent Power are striving to gain traction in this segment. Moreover, domestic solar panel makers are rooting for the imposition of anti-dumping duty on imported solar equipment.
SunEdison remains focused on expanding its geographic reach through acquisitions and strategic partnerships in different solar power projects in addition to the Indian project. Recently, the company acquired a 50% stake in Silver Ridge Power, LLC, a subsidiary of The AES Corporation, for $178.6 million in cash.
The company’s focus on solar projects is a big positive considering the global demand for solar energy. So it is not surprising that SunEdison’s solar business grew 86.8% year over year in the last-reported quarter.
Though SunEdison’s growing exposure to the solar energy market is encouraging, project development requires considerable time and investments. Hence, any delay or inability in selling these projects at desired prices could affect liquidity. Going forward, the pricing environment and competition from SunPower Corp. (SPWR) and First Solar Inc. (FSLR) remain the headwinds.
Currently, SunEdison has a Zacks Rank #3 (Hold). Investors can also consider NVIDIA Corp (NVDA), which sports a Zacks Rank #1 (Strong Buy).
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