SunEdison (SUNE) has announced a 241 kilowatts (kW) solar PV micro-grids project to provide electricity to approximately 7,800 residents of 54 villages in India. SunEdison will work with Rural Electrification Corporation, a Government of India organization, and the Andhra Pradesh Eastern Power Distribution Company Limited (APEPDCL).
This would be the company’s second PV micro-grid project in the recent months after a 159-kilowatt (kW) solar project was announced in July.
Through its SunEdison Eradication of Darkness (SEED) initiative, SunEdison will begin the construction of the current set of micro-grids with battery storage in Oct 2014. The project is expected to be ready for commissioning by Mar 2015. This initiative will not only have a positive impact on the social lives of people but also provide a clean and renewable source of power.
SunEdison’s increasing involvement in India’s solar projects is a positive as in the recent 2014 budget, power generation though renewable sources was given high priority, with the Indian Government allocating INR1,000 crore or approximately $164 million (1USD= INR60.95 as on Sep 23) 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.
These projections have put India on the radar of solar power companies. Also, per WSJ, the central government of India along with five state governments has set a target to set up 25 solar parks.
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.
SunEdison remains focused on expanding its geographic reach through acquisitions and strategic partnerships in different solar power projects in addition to the Indian project. 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 36.3% year over year in the last-reported quarter (second-quarter 2014).
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 headwinds.
Currently, SunEdison has a Zacks Rank #3 (Hold). Investors can also consider Stratasys Ltd. (SSYS), which sports a Zacks Rank #1 (Strong Buy).
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