Finnish company Fortum plans to sell 185 MW solar projects

Mumbai: Finnish energy company Fortum plans to sell its operational assets in India -185 MW of solar projects spread across Rajasthan, Karnataka and Madhya Pradesh.

Kotak Mahindra Capital has been mandated to find buyers for the assets.

Fortum is targeting an enterprise value of Rs 1,600 crore ($200 million) for the assets, said two people aware of the development. Feelers were sent to global funds and domestic energy producers, they said.


The assets comprise a 100 MW solar project at the Pavagada Solar Park in Karnataka, two projects of 70 MW and 5 MW in Rajasthan and another 10 MW facility in Madhya Pradesh.

At present, these operational assets are jointly owned by Fortum, Macquarie Group-backed UK Climate Investments and Finland-based asset management firm Elite Alfred Berg. UK Climate Investments (which owns 40%) and Elite Alfred Berg (14%) bought the stakes from Fortum in 2018.

A Fortum spokesperson declined to comment, while an email sent to UK Climate Investments did not elicit any responses till press time on Monday.

Since 2013, Fortum has developed and constructed about 1 GW of solar power in India. Over time, a majority of this capacity has been divested to enable further investments with a limited equity exposure, in line with the build-operate-transfer business model. In one of the deals, Fortum in 2021 sold its 250 MW Pavagada II and 250 MW Rajasthan solar power plants to Actis for about ₹280 million.

At present, Fortum has a pipeline of 1 GW in India. Recently, it has won the rights to build a 200 MW solar project in Gujarat under a 25-year power purchase agreement with Gujarat Urja Vikas Nigam at a fixed tariff of '2.29/kWh. The project will be commissioned by 2024.

Last year, Fortum won the right from Solar Energy Corporation of India (SECI) to build two solar power parks with a total capacity of 600 MW in Karnataka. These are also expected to be commissioned by 2024.

Besides expanding its solar power generation, Fortum is aggressively exploring opportunities in the electric vehicle charging space in India. Fortum Charge & Drive, a pioneer in electric vehicle charging, has partnered with MG Motor and Carzonrent to set up charging points for electric cars across the country.

Only 41% of projects awarded by the SECI during fiscal years 2018-21 got commissioned till December 2022. As much as 23% of the projects were cancelled while the remaining are delayed due to issues in land acquisition, and evacuation and supply-side constraints, said a recent Crisil report.

India has pledged to install 450 GW of renewable energy capacity by 2030, which is the world's largest renewable energy expansion programme, to meet its commitments related to the Paris Agreement on Climate Change.