<div>After the Hero group, Bharti Enterprises' decision to enter the renewable energy business, a completely new field for the company, is surprising but not shocking. Founded in 1976, the Bharti group has ventured into various fields including Telecom, Retail, Insurance and Wealth management. But is it so easy for a company to enter the renewable sector in India with amateur group in renewable sector like Softbank? The Japanese technology giant has a very small portfolio in the Solar energy and Foxconn which claims to have some expertise in manufacturing solar panels is known for making Apple Iphones.</div><div> </div><div>One must note that the Bharti group entered the retail business with an international player like Walmart and the insurance business with AXA.</div><div> </div><div>However, the move to invest as much as $20 billion over the next 10 years into a relatively new area for Softbank and completely unknown sectors for India’s Bharti and Taiwan’s Foxconn shows the easily available funding for the sector in the international market.</div><div> </div><div>According to Salil Garg an analyst at Fitch India Ratings, "Renewable energy offers huge opportunities for companies to enter the business. The government supports it with preferential tariff, renewable power obligation etc. Moreover, there is plenty of funding available for the sector. So due to tariff and tax benefits and the less time taken to set up a solar power plant, the return on equity is also very good."</div><div> </div><div>Moreover, a solar power plant takes around one year to reach the production cycle after funding and clearances as against a gestation period of 5-8 years for a thermal power plant.</div><div> </div><div>Moreover, due to rapid changes in technology, the developers have befitted and it is hoped that within next two years the solar energy would be cheaper than the thermal energy. This would not make the Return on Equity higher for the developers in the coming years.</div><div> </div><div>However, a major concern in the short term remains with the capability of state discoms to buy expensive solar power under the renewable purchase obligation. At present, the cost of solar power is above Rs 5 per unit, which makes it almost double the rate of average cost of thermal power under the power Purchase Agreements.</div><div> </div><div>Another problem that the sector faces is that of acquiring land for the projects. Given the failure of the NDA government in getting consensus on the Land Acquisition Bill it looks unlikely that this problem will be resolved anytime soon.</div><div> </div><div>How the company manages to sail through these challenges will decide whether Bharti will be using its own solar power panels to run its mobile towers.</div>
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