Leading energy provider Fortum has made the decision to leave the Indian solar market, ending its involvement in the nation’s solar industry. This choice is a result of Fortum’s strategy realignment, which also involves a concentration on other markets and business sectors.
The company’s decision to leave the Indian solar market is a reflection of how it views the competitive landscape, legal obstacles, and market dynamics in the renewable energy industry. Even though solar energy development in India has a lot of promise, Fortum has decided that the current state of the industry does not support its long-term commercial goals.
Given that Fortum has been progressively reducing the scope of its solar portfolio in recent years, the company’s decision to withdraw from the Indian solar industry is not surprising. This move is a component of Fortum’s larger plan to realign resources to markets and segments that have more growth potential and returns, optimise its asset portfolio, and streamline operations.
Although Fortum’s departure can have a short-term effect on the Indian solar business, it also gives other firms a chance to step in and increase their footprint. The rising demand for clean energy, falling solar rates, and favourable government regulations have made the Indian solar business an appealing prospect for investors and entrepreneurs.
The departure of Fortum highlights how crucial flexibility and wise judgement are in the quickly changing field of renewable energy. In order to be competitive and sustainable, firms need to reevaluate their goals and realign their strategies in light of the industry’s revolutions and shifting market dynamics.
Fortum’s strategic vision and emphasis on maximising value for its stakeholders are reflected in its decision to withdraw from the Indian solar sector. Although the departure can indicate a change in the competitive environment, it also offers chances for both new and current companies to support India’s renewable energy objectives and promote the expansion and innovation of the industry.
In May 2024, Finnish energy company Fortum announced its exit from the Indian solar market by agreeing to sell its remaining 43.75% stake in a 185 MW solar portfolio to Gentari Renewables India, a subsidiary of Malaysia-based clean energy firm Gentari. This portfolio includes four solar power plants: Amrit (5 MW), Kapeli (10 MW), Bhadla (70 MW), and Pavagada (100 MW).
Fortum’s partners in these projects, UK Climate Investments Lakeside Limited (holding 40%) and a fund managed by Evli Fund Management Ltd (holding 16.25%), also divested their respective stakes. This transaction is part of Fortum’s strategic decision to limit its exposure in India and refocus on the Nordic region.
Fortum entered the Indian market in 2012, primarily focusing on renewable energy development. In 2021, the company sold 500 MW of solar assets to Actis, a global infrastructure investment firm, indicating a gradual reduction of its presence in India’s solar sector.
Following the recent divestment, Fortum retains some operations in India, including electric vehicle (EV) charging services and a renewables development portfolio with projects at various stages. However, the company is evaluating alternatives for these remaining operations, which amount to approximately €30 million in net assets and guarantees, and has stated it will not make any further commitments in India.
This strategic shift aligns with Fortum’s Nordic-focused strategy, allowing the company to optimize its asset portfolio and streamline operations by allocating resources to markets with higher growth potential and strategic alignment.
The transaction is expected to close in the second quarter of 2024, with Fortum anticipating a profit from the divestment upon completion.
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