Fortum, a clean energy company from Finland, confirmed that it has appointed Barclays to serve as its banking partner and facilitate the sale of a stake in its operational Indian solar assets.

The confirmation comes in response to speculation that the company was seeking to withdraw from the Indian market. In a company release, Sanjay Aggarwal, managing director of Fortum India Pvt. Ltd, stated, “We can consider taking on financial investors alongside us for our operating renewables assets, we remain committed to developing solar power and exploring new opportunities and this has not changed.”

In a stock exchange release dated April 12, 2016, Fortum said that it was seeking to allocate funds ranging from €200 (~$235.676 million) million to €400 million (~$471.352 million) from its planned growth capital for Indian solar projects.

A Fortum executive aware of the development confirmed that Barclays has been brought on board to help with the asset sale, saying, “We do not know why there is speculation of an exit, this is a planned move. All of the projects for which we seek partners are fully operational ones and are generating regular cash flows.”

The executive added, “In this way, we can have capital from the operational projects to develop new projects and it makes sense for the company as we chart our growth in India.”

According to Mercom’s India Solar Project Tracker, Fortum has installed 85 MW of solar capacity and has a solar pipeline of 100 MW in India.

The operational solar projects include:

• A 5 MW solar project in Rajasthan under the National Solar Mission (NSM) Phase-I, Batch 1, for which a 25-year power purchase agreement (PPA) has been signed with NTPC Vidyut Vyapar Nigam Limited (NVVN) at a tariff of ₹12.75 (~$0.195)/kWh.

• A 10 MW solar project in Madhya Pradesh under NSM Phase-II, Batch 1, for which a PPA was signed with Solar Energy Corporation of India (SECI) at a fixed tariff of ₹5.45 (~$0.083)/kWh along with viability gap funding (VGF) for a 25-year period.

• Another 70 MW solar project in Rajasthan under NSM Phase-II, Batch 2, was commissioned with a PPA signed by NTPC at a tariff of ₹4.34 (~$0.066)/kWh for a 25-year period.

• The 100 MW solar project in Pavagada Solar Park under NSM Phase-II, Batch 2, is also expected to be commissioned by the end of October 2017. PPAs for this project were signed in June 2016 at a tariff of ₹4.79 (~$0.073)/kWh for a 25-year period.

Although the project economics of Fortum’s portfolio are unclear, most of the projects listed above have good off-takers with decent tariff rates.

In 2017, Fortum also signed an agreement with E.ON to purchase a total equity value of E.ON’s 46.65 percent stake in Uniper SE amounting to €3.76 billion (~$4.43 billion).

“Recycling capital through the sale of operational assets to build new projects is a very common practice around the world,” said Raj Prabhu, chief executive officer of Mercom Capital Group. “There is plenty of interest for quality projects.”

Image credit: Fortum