With the country going through the solar industry cycle; it will be interesting to note down the exit options available to solar developers in the near future.
Some of the exit strategies that we can see (and maybe more) in India are:
1. PPA exit :: Exiting at the PPA stage seems to be the norm now with companies not being able to raise finance or slowly understanding the kind of risks involved in solar plant implementation.
(Out here; the sellers will not be called solar developers. But we could see a business model arising where people will use their on-ground knowledge to arrange PPAs and then work a sell-out plan)
2. Sell-Out to Financial Investors:: Companies will look to sell out within the first two years of operation. This is the trend globally but maybe in India we will see sell-out to financial investors coming from 3rd or 4th year onwards; after initial operations and data verification. But this is not going to be easy if the EPC player is not well know among the investor community.
Financial investors will expect some kind of data (can come in after couple of years of operations) to ensure return and the risk.
3. Sell-Out to Strategic Investors :: We may not see strategic investors buying solar farms initially or maybe not for another 3-5 years. The market is just opening and companies will have various options to choose from in different States of India.
Also selling companies will expect the moon after 1-2 years of operations. And Indian strategic players may not be too keen.
There could also be many on-the-ground challenges that cannot be foreseen now and may delay options 2 and 3.
One factor that can fasten the options 2 and 3 is that if the Government incentive payments are not made on time; we could see developers struggling with working capital.
4. IPO :: With somewhat successful IPOs from a couple of renewable energy companies (but nothing yet in solar) in India; many solar developers will be looking at IPO options.
But IPO is a big game and does come at a cost of its own. Also this may take few years with most of the developers still learning solar with their first small project of 1 / 2 /5MW; this size being too small to attract large investors (PE funds) or go to public market.