SunBorne Energy Technologies, a solar power developer backed by billionaire Vinod Khosla, is close to arranging 1.5 billion rupees ($34 million) in loans from three banks for its first plant in India.
SBI Capital Markets Ltd., a unit of India’s largest lender, is arranging the deal, SunBorne Chief Operating Officer Gagan Vermani said today by telephone.
“We already have a sanction letter from one bank and two more are in the pipeline,” Vermani said. “For all practical terms, we’ve closed.” Vermani declined to name the banks.
Solar projects in the country facing a government deadline to build 1.1 gigawatt of capacity by the year’s end are racing to secure financing. Banks have expressed concerns about lending to the new sector, including worries that solar equipment may not perform as expected under Indian climactic conditions which would affect projects’ ability to produce enough power to pay back loans.
“There’s only seven to eight months left to put up that 1.1 gigawatt,” Vermani said. “We don’t see most of that happening.”
As projects get delayed to next year, Sunborne expects a surge in contracts to design and build projects for other developers in 2012, he said.
SunBorne is building a 15-megawatt plant in Gujarat state that is due to be completed this year. The 2.1 billion rupee-plant will use modules from Germany’s SolarWorld and China’s Suntech Power Holdings Co., Vermani said.
Last week, SunBorne selected Jiangsu-based Suntech, the world’s largest producer of solar modules, over Trina Solar Ltd. and Renewable Energy Corp ASA for the supply of 100 megawatts of panels over the next two years. The deal is worth about $150 million, Vermani said.
Suntech offered the best insight into long-term costs because it has contracts tied up for raw materials and components like silicon and wafers, he said.
“Prices in this sector fluctuate very rapidly,” he said. “This long-term agreement will help us with pricing.”
SunBorne and Suntech will agree on prices on a quarterly basis, Vermani said. Sunborne expects module prices from top global manufacturers to fall as low as $1.4 per megawatt by the end of this year, he said.
Sunborne is also planning a 5-megawatt plant near Jodhpur in Rajasthan state. By 2015, the company aims to set up 500 megawatts of photovoltaic capacity, he said.